VEL ACCOUNT OF ALLMERICA FINANCIAL LIFE INSURANCE & ANN CO, 485BPOS, 1996-04-26

VEL ACCOUNT OF ALLMERICA FINANCIAL LIFE INSURANCE & ANN CO
485BPOS, 1996-04-26

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<PAGE>

Registration No. 33-42687
811-5183

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-6

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 9

VEL ACCOUNT OF ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(Exact Name of Registrant)

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
440 Lincoln Street
Worcester MA 01653
(Address of Principal Executive Office)

Abigail M. Armstrong, Secretary and Counsel
440 Lincoln Street
Worcester MA 01653
(Name and Address of Agent for Service of Process)

It is proposed that this filing will become effective:

----- immediately upon filing pursuant to paragraph (b)
X on April 30, 1996 pursuant to paragraph (b)
-----
----- 60 days after filing pursuant to paragraph (a) (1)
----- on (date) pursuant to paragraph (a) (1)
----- on (date) pursuant to paragraph (a) (2) of Rule 485

FLEXIBLE PREMIUM VARIABLE LIFE

Pursuant to Reg. Section 270.24f-2 of the Investment Company Act of 1940,
Registrant has registered an indefinite amount of its securities under the
Securities Act of 1933. The Rule 24f-2 Notice for the issuer's fiscal year
ended December 31, 1995 was filed on February 29, 1996.

<PAGE>

RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS

<TABLE>
<CAPTION>
Item No. of
Form N-8B-82 Caption in Prospectus
- ------------ ---------------------
<S> <C>

1 . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
2 . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
3 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
4 . . . . . . . . . . . . . . . . . . . . . . . . . Distribution
5 . . . . . . . . . . . . . . . . . . . . . . . . . The Company, The VEL Account
6 . . . . . . . . . . . . . . . . . . . . . . . . . The VEL Account
7 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
8 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
9 . . . . . . . . . . . . . . . . . . . . . . . . . Legal Proceedings
10 . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Description of the Company, The
VEL Account, Allmerica Investment Trust,
Variable Insurance Products Fund, Variable
Insurance Products Fund II, T. Rowe Price
International Series, Inc. and Delaware
Group Premium Fund, Inc.; The Policy; Policy
Termination and Reinstatement; Other Policy
Provisions
11 . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Allmerica Investment Trust;
Variable Insurance Products Fund; Variable
Insurance Products Fund II; T. Rowe Price
International Series, Inc.; Delaware Group
Premium Fund, Inc.; Investment Objectives
and Policies
12 . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Allmerica Investment Trust;
Variable Insurance Products Fund; Variable
Insurance Products Fund II; T. Rowe Price
International Series, Inc.; Delaware Group
Premium Fund, Inc.
13 . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Allmerica Investment Trust;
Variable Insurance Products Fund; Variable
Insurance Products Fund II; T. Rowe Price
International Series, Inc.; Delaware Group
Premium Fund, Inc.; Investment Advisory
Services to the Trust; Investment Advisory
Services to Variable Insurance Products
Fund; Investment Advisory Services to
Variable Insurance Products Fund II;
Investment Advisory Services to T. Rowe
Price International Series, Inc.; Investment
Advisory Services to Delaware Group
Premium Fund, Inc.; Charges and
Deductions
14 . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Application for a Policy
15 . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Application for a Policy;
Premium Payments; Allocation of Net
Premiums
16 . . . . . . . . . . . . . . . . . . . . . . . . . The VEL Account; Allmerica
Investment Trust; Variable Insurance
Products Fund; Variable Insurance Products
Fund II; T. Rowe Price International Series,
Inc.; Delaware Group Premium Fund, Inc.;
Premium Payments; Allocation of Net Premiums
17 . . . . . . . . . . . . . . . . . . . . . . . . Summary; Surrender; Partial Withdrawal;
Charges and Deductions; Policy
</TABLE>

<S> <C>
Termination and Reinstatement
18 . . . . . . . . . . . . . . . . . . . . . . . . . The VEL Account; Allmerica
Investment Trust; Variable Insurance
Products Fund; Variable Insurance Products
Fund II; T. Rowe Price International Series,
Inc.; Delaware Group Premium Fund, Inc.;
Premium Payments
19 . . . . . . . . . . . . . . . . . . . . . . . . . Reports; Voting Rights
20 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
21 . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Policy Loans; Other Policy
Provisions
22 . . . . . . . . . . . . . . . . . . . . . . . . . Other Policy Provisions
23 . . . . . . . . . . . . . . . . . . . . . . . . . Not Required
24 . . . . . . . . . . . . . . . . . . . . . . . . . Other Policy Provisions
25 . . . . . . . . . . . . . . . . . . . . . . . . . The Company
26 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
27 . . . . . . . . . . . . . . . . . . . . . . . . . The Company
28 . . . . . . . . . . . . . . . . . . . . . . . . . Directors and Principal Officers of the
Company
29 . . . . . . . . . . . . . . . . . . . . . . . . . The Company
30 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
31 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
32 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
33 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
34 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
35 . . . . . . . . . . . . . . . . . . . . . . . . . Distribution
36 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
37 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
38 . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Distribution
39 . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Distribution
40 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
41 . . . . . . . . . . . . . . . . . . . . . . . . . The Company, Distribution
42 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
43 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
44 . . . . . . . . . . . . . . . . . . . . . . . . . Premium Payments; Policy Value and Cash
Surrender Value
45 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
46 . . . . . . . . . . . . . . . . . . . . . . . . . Policy Value and Cash Surrender Value;
Federal Tax Considerations
47 . . . . . . . . . . . . . . . . . . . . . . . . . The Company
48 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
49 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
50 . . . . . . . . . . . . . . . . . . . . . . . . . The VEL Account
51 . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page; Summary; Charges and
Deductions; The Policy; Policy Termination
and Reinstatement; Other Policy Provisions
52 . . . . . . . . . . . . . . . . . . . . . . . . . Addition, Deletion or Substitution of
Investments
53 . . . . . . . . . . . . . . . . . . . . . . . . . Federal Tax Considerations
54 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
55 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
56 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
57 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
58 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
59 . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable

</TABLE>
<PAGE>

This prospectus describes individual flexible premium variable life insurance
policies ("Policies") offered by Allmerica Financial Life Insurance and
Annuity Company ("Company") to eligible applicants who are members of a
non-qualified employee benefit plan having 10 or more members and are age 80
years old and under. Within limits, you may choose the amount of initial
premium desired and the initial Sum Insured. You have the flexibility to
vary the frequency and amount of premium payments, subject to certain
restrictions and conditions. You may withdraw a portion of the Policy's
surrender value, or the Policy may be fully surrendered at any time, subject
to certain limitations.

The Policies permit you to allocate net premiums among up to seven of
eighteen sub-accounts ("Sub-Accounts") of the VEL Account, a separate account
of the Company, and a fixed interest account ("General Account") of the
Company (together "Accounts"). Each Sub-Account invests its assets in a
corresponding investment portfolio of Allmerica Investment Trust ("Trust"),
Variable Insurance Products Fund ("VIP"), Variable Insurance Products Fund II
("VIP II"), T. Rowe Price International Series, Inc. ("T. Rowe Price") or
Delaware Group Premium Fund, Inc. ("DGPF"). The Trust is managed by
Allmerica Investment Management Company, Inc. ("Allmerica Investment"). VIP
and VIP II are managed by Fidelity Management & Research Company ("Fidelity
Management"). T. Rowe Price is managed by Rowe Price-Fleming International,
Inc. The International Equity Series, which is the only investment portfolio
available under the Policies, is managed by Delaware International Advisers
Ltd. ("Delaware International").

In certain circumstances, a Policy may be considered a "modified endowment
contract." Under the Internal Revenue Code, any policy loan, partial
withdrawal or surrender from a modified endowment contract may be subject to
tax and tax penalties. See "FEDERAL TAX CONSIDERATIONS - Modified Endowment
Contracts."

The Trust, VIP, VIP II, T. Rowe Price and DGPF are open-end, diversified
series investment companies. Eleven different investment portfolios of the
Trust are available under the Policies: the Growth Fund, Investment Grade
Income Fund, Money Market Fund, Equity Index Fund, Government Bond Fund,
Select International Equity Fund, Select Aggressive Growth Fund, Select
Capital Appreciation Fund, Select Growth Fund, Select Growth and Income Fund
and Small Cap Value Fund (the "Funds"). Four of VIP's investment portfolios
are available under the Policies: High Income Portfolio, Equity-Income
Portfolio, Growth Portfolio, and Overseas Portfolio ("Portfolios"). One
investment portfolio of VIP II ("Portfolio") is available under the Policies:
the Asset Manager Portfolio. One investment portfolio of T. Rowe Price
("Portfolio") is available under the Policies: the International Stock
Portfolio. One investment portfolio of DGPF ("Series") is available under
the Policies: the International Equity Series. Each Fund, Portfolio and
Series has its own investment objectives. The accompanying prospectuses of
the Trust, VIP, VIP II, T. Rowe Price and DGPF describe the investment
objectives and certain attendant risks of each Underlying Fund. The
International Stock Portfolio of T. Rowe Price is not available in all states.

----------

IT MAY NOT BE ADVANTAGEOUS TO PURCHASE FLEXIBLE PREMIUM VARIABLE LIFE
INSURANCE AS A REPLACEMENT FOR YOUR CURRENT LIFE INSURANCE OR IF YOU ALREADY
OWN A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY.

THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY CURRENT PROSPECTUSES OF THE
ALLMERICA INVESTMENT TRUST, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, T. ROWE PRICE INTERNATIONAL SERIES, INC. AND
DELAWARE GROUP PREMIUM FUND, INC. THE HIGH INCOME PORTFOLIO OF VARIABLE
INSURANCE PRODUCTS FUND INVESTS IN HIGHER YIELDING, HIGHER RISK, LOWER RATED
DEBT SECURITIES (SEE "INVESTMENT OBJECTIVES AND POLICIES" IN THIS
PROSPECTUS). INVESTORS SHOULD RETAIN A COPY OF THIS PROSPECTUS FOR FUTURE
REFERENCE.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

THE POLICIES ARE OBLIGATIONS OF ALLMERICA FINANCIAL LIFE INSURANCE AND
ANNUITY COMPANY AND ARE DISTRIBUTED BY ALLMERICA INVESTMENTS, INC. THE
POLICIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK OR CREDIT UNION. THE POLICIES ARE NOT INSURED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION

Dated April 30, 1996
440 Lincoln Street
Worcester, Massachusetts 01653
(508) 855-1000

<PAGE>

(Continued from cover page)

(FDIC), OR ANY OTHER FEDERAL AGENCY. INVESTMENTS IN THE POLICIES ARE SUBJECT
TO VARIOUS RISKS, INCLUDING THE FLUCTUATION OF VALUE AND POSSIBLE LOSS OF
PRINCIPAL.

There is no guaranteed minimum Policy value. The value of a Policy will vary
up or down to reflect the investment experience of allocations to the
Sub-Accounts and the fixed rates of interest earned by allocations to the
General Account. The Policy value will also be adjusted for other factors,
including the amount of charges imposed. The Policy will remain in effect so
long as the Policy value less any outstanding debt is sufficient to pay
certain monthly charges imposed in connection with the Policy. The Policy
value may decrease to the point where the Policy will lapse and provide no
further death benefit without additional premium payments.

If the Policy is in effect at the death of the Insured, the Company will pay
a death benefit (the "Death Proceeds") to the beneficiary. Prior to the
Final Premium Payment Date, the Death Proceeds equal the Sum Insured, less
any debt, partial withdrawals, and any due and unpaid charges. You may
choose either Sum Insured Option 1 (the Sum Insured is fixed in amount) or
Sum Insured Option 2 (the Sum Insured includes the Policy value in addition
to a fixed insurance amount). A Policyowner has the right to change the Sum
Insured option, subject to certain conditions. A Guideline Minimum Sum
Insured, equivalent to a percentage of the Policy value, will apply if
greater than the Sum Insured otherwise payable under Option 1 or Option 2.

2
<PAGE>

TABLE OF CONTENTS

SPECIAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 11

DESCRIPTION OF THE COMPANY, THE VEL ACCOUNT, THE TRUST, VIP,
VIP II, T. ROWE PRICE AND DGPF . . . . . . . . . . . . . . . . . . . . 13
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . 14
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS . . . . . . . . 19
VOTING RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . 20

THE POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
APPLICATION FOR A POLICY . . . . . . . . . . . . . . . . . . . . . 20
FREE LOOK PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . 21
CONVERSION PRIVILEGES . . . . . . . . . . . . . . . . . . . . . . 21
PREMIUM PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 21
ALLOCATION OF NET PREMIUMS . . . . . . . . . . . . . . . . . . . . 22
TRANSFER PRIVILEGE . . . . . . . . . . . . . . . . . . . . . . . . 22
DEATH PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SUM INSURED OPTIONS . . . . . . . . . . . . . . . . . . . . . . . 23
CHANGE IN SUM INSURED OPTION . . . . . . . . . . . . . . . . . . . 25
CHANGE IN FACE AMOUNT . . . . . . . . . . . . . . . . . . . . . . 25
POLICY VALUE AND SURRENDER VALUE . . . . . . . . . . . . . . . . . 26
PAYMENT OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 27
OPTIONAL INSURANCE BENEFITS . . . . . . . . . . . . . . . . . . . 27
SURRENDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
PARTIAL WITHDRAWAL . . . . . . . . . . . . . . . . . . . . . . . . 27

CHARGES AND DEDUCTIONS . . . . . . . . . . . . . . . . . . . . . . . . 28
STATE PREMIUM TAX . . . . . . . . . . . . . . . . . . . . . . . . 28
MONTHLY DEDUCTION FROM POLICY VALUE . . . . . . . . . . . . . . . 28
CHARGES AGAINST ASSETS OF THE VEL ACCOUNT . . . . . . . . . . . . 29
SURRENDER CHARGE . . . . . . . . . . . . . . . . . . . . . . . . . 30
CHARGES ON PARTIAL WITHDRAWAL . . . . . . . . . . . . . . . . . . 31
TRANSFER CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . 31
CHARGE FOR INCREASE IN FACE AMOUNT . . . . . . . . . . . . . . . . 32
OTHER ADMINISTRATIVE CHARGES . . . . . . . . . . . . . . . . . . . 32

POLICY LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

POLICY TERMINATION AND REINSTATEMENT . . . . . . . . . . . . . . . . . 33

OTHER POLICY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . 34

DIRECTORS AND PRINCIPAL OFFICERS OF THE COMPANY . . . . . . . . . . . . 34

DISTRIBUTION . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 35

REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

FURTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 36

INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . 36

FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . 36
THE COMPANY AND THE VEL ACCOUNT . . . . . . . . . . . . . . . . . 36
TAXATION OF THE POLICIES . . . . . . . . . . . . . . . . . . . . 37
MODIFIED ENDOWMENT CONTRACTS . . . . . . . . . . . . . . . . . . 37

MORE INFORMATION ABOUT THE GENERAL ACCOUNT . . . . . . . . . . . . . . 38

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 38

APPENDIX A - OPTIONAL BENEFITS . . . . . . . . . . . . . . . . . . . . 39

APPENDIX B - PAYMENT OPTIONS . . . . . . . . . . . . . . . . . . . . . 39

APPENDIX C - ILLUSTRATIONS OF SUM INSURED, POLICY VALUES AND
ACCUMULATED PREMIUMS . . . . . . . . . . . . . . . . . . . . . . . . . 41

APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES . . . . . . . . 47

<PAGE>

SPECIAL TERMS

AGE: The Insured's age as of the nearest birthday measured from a Policy
anniversary.

ACCUMULATION UNIT: A measure of your interest in a Sub-Account.

INSURANCE AMOUNT AT RISK: The Sum Insured less the Policy Value.

BENEFICIARY: The person(s) designated by the owner of the Policy to receive
the insurance proceeds upon the death of the Insured.

COMPANY: Allmerica Financial Life Insurance and Annuity Company

DATE OF ISSUE: The date set forth in the Policy used to determine the Monthly
Payment Date, Policy months, Policy years, and Policy anniversaries.

DEATH PROCEEDS: Prior to the Final Premium Payment Date, the Death Proceeds
equal the amount calculated under the applicable Sum Insured Option (Option 1
or Option 2), less Debt outstanding at the time of the Insured's death,
partial withdrawals, if any, partial withdrawal charges, and any due and
unpaid Monthly Deductions. After the Final Premium Payment Date, the Death
Proceeds equal the Surrender Value of the Policy.

DEBT: All unpaid Policy loans plus interest due or accrued on such loans.

DELIVERY RECEIPT: An acknowledgment, signed by the Policyowner and returned
to the Company's Principal Office, that the Policyowner has received the
Policy and the Notice of Withdrawal Rights.

EVIDENCE OF INSURABILITY: Information, satisfactory to the Company, that is
used to determine the Insured's Premium Class.

FACE AMOUNT: The amount of insurance coverage applied for. The Face Amount
of each Policy is set forth in the specification pages of the Policy.

FINAL PREMIUM PAYMENT DATE: The Policy anniversary nearest the Insured's 95th
birthday. The Final Premium Payment Date is the latest date on which a
premium payment may be made. After this date, the Death Proceeds equal the
Surrender Value of the Policy.

GENERAL ACCOUNT: All the assets of the Company other than those held in a
separate account.

GUIDELINE ANNUAL PREMIUM: The annual amount of premium that would be payable
through the Final Premium Payment Date of a Policy for the specified Sum
Insured, if premiums were fixed by the Company as to both timing and amount,
and monthly cost of insurance charges were based on the 1980 Commissioners
Standard Ordinary Mortality Tables (Mortality Table B, Smoker or Non-Smoker,
for unisex Policies), net investment earnings at an annual effective rate of
5%, and fees and charges as set forth in the Policy and any Policy riders.
The Sum Insured Option 1 Guideline Annual Premium is used when calculating
the maximum surrender Charge.

GUIDELINE MINIMUM SUM INSURED: The minimum Sum Insured required to qualify
the Policy as "life insurance" under Federal tax laws. The Guideline Minimum
Sum Insured varies by Age. It is calculated by multiplying the Policy Value
by a percentage determined by the Insured's Age.

LOAN VALUE: The maximum amount that may be borrowed under the Policy.

MONTHLY PAYMENT DATE: The date on which the Monthly Deduction is deducted
from Policy Value.

MONTHLY DEDUCTION: Charges deducted monthly from the Policy Value of a Policy
prior to the Final Premium Payment Date. The charges include the monthly
cost of insurance, the monthly cost of any benefits provided by riders, and
the monthly administrative charge.

NET PREMIUM: An amount equal to the premium less a premium tax charge.

POLICY CHANGE: Any change in the Face Amount, the addition or deletion of a
rider, or a change in the Sum Insured Option.

POLICY VALUE: The total amount available for investment under a Policy at any
time. It is equal to the sum of (a) the value of the Accumulation Units
credited to a Policy in the Sub-Accounts and (b) the accumulation in the
General Account credited to that Policy.

<PAGE>

PREMIUM CLASS: The risk classification that the Company assigns the Insured
based on the information in the application and any other Evidence of
Insurability considered by the Company. The Insured's Premium Class will
affect the cost of insurance charge and the amount of premium required to
keep the Policy in force.

PRINCIPAL OFFICE: The Company's office, located at 440 Lincoln Street,
Worcester, Massachusetts 01653.

PRO RATA ALLOCATION: In certain circumstances, you may specify from which
Sub-Account certain deductions will be made or to which Sub-Account Policy
Value will be allocated. If you do not, the Company will allocate the
deduction or Policy Value among the General Account and the Sub-Accounts in
the same proportion that the Policy Value in the General Account and the
Policy Value in each Sub-Account bear to the total Policy Value on the date
of deduction or allocation.

SEPARATE ACCOUNT: A separate account consists of assets segregated from the
Company's other assets. The investment performance of the assets of each
separate account is determined separately from the other assets of the
Company. The assets of a separate account which are equal to the reserves and
other contract liabilities are not chargeable with liabilities arising out of
any other business which the Company may conduct.

SUB-ACCOUNT: A subdivision of the VEL Account. Each Sub-Account invests
exclusively in the shares of a corresponding Fund of the Allmerica Investment
Trust, a corresponding Portfolio of the Variable Insurance Products Fund or
the Variable Insurance Products Fund II, the International Stock Portfolio of
T. Rowe Price International Series, Inc. or the International Equity Series
of Delaware Group Premium Fund, Inc.

SUM INSURED: The amount payable upon the death of the Insured, before the
Final Premium Payment Date, prior to deductions for Debt outstanding at the
time of the Insured's death, partial withdrawals and partial withdrawal
charges, if any, and any due and unpaid Monthly Deductions. The amount of
the Sum Insured will depend on the Sum Insured Option chosen, but will always
be at least equal to the Face Amount.

SURRENDER VALUE: The amount payable upon a full surrender of the Policy. It
is the Policy Value, less any Debt and any surrender charges.

UNDERLYING FUNDS: The Funds of the Allmerica Investment Trust, the Portfolios
of the Variable Insurance Products Fund and Variable Insurance Products Fund
II, the Portfolio of T. Rowe Price International Series, Inc. and the Series
of the Delaware Group Premium Fund, Inc. available under the Policies.

UNDERLYING INVESTMENT COMPANIES: Allmerica Investment Trust, Variable
Insurance Products Fund, Variable Insurance Products Fund II, T. Rowe Price
International Series, Inc. and Delaware Group Premium Fund, Inc.

VALUATION DATE: A day on which the net asset value of the shares of any of
the Underlying Funds is determined and Accumulation Unit values of the
Sub-Accounts are determined. Valuation Dates currently occur on each day on
which the New York Stock Exchange is open for trading, and on such other days
(other than a day during which no payment, partial withdrawal, or surrender
of a Policy is received) when there is a sufficient degree of trading in an
Underlying Fund's securities such that the current net asset value of the
Sub-Accounts may be materially affected.

VALUATION PERIOD: The interval between two consecutive Valuation Dates.

VEL ACCOUNT: A separate account of the Company to which the Policyowner may
make Net Premium allocations.

WRITTEN REQUEST: A Request by the Policyowner in writing, satisfactory to the
Company.

YOU OR YOUR: The Policyowner, as shown in the application or the latest
change filed with the Company.

<PAGE>

SUMMARY

THE POLICY - The flexible premium variable life policy (the "Policy") offered
by this prospectus allows you, subject to certain limitations, to make
premium payments in any amount and frequency. As long as the Policy remains
in force, it will provide for: (a) life insurance coverage on the named
Insured; (b) Policy Value; (c) surrender rights and partial withdrawal
rights; (d) loan privileges; and (e) in some cases, additional insurance
benefits available by rider for an additional charge.

The Policies are life insurance contracts, with death benefits, Policy Value,
and other features traditionally associated with life insurance. The
Policies are "variable" because, unlike the fixed benefits of ordinary whole
life insurance, the Policy Value will, and under certain circumstances the
Death Proceeds may, increase or decrease depending on the investment
experience of the Sub-Accounts of the VEL Account. They are "flexible
premium" policies, because, unlike traditional insurance policies, there is
no fixed schedule for premium payments. Although you may establish a
schedule of premium payments ("planned premium payments"), failure to make
the planned premium payments will not necessarily cause a Policy to lapse nor
will making the planned premium payments guarantee that a Policy will remain
in force. Thus, you may, but are not required to, pay additional premiums.

The Policy will remain in force until the Surrender Value is insufficient to
cover the next Monthly Deduction and loan interest accrued, if any, and a
grace period of 62 days has expired without adequate payment being made by
you.

SURRENDER CHARGES - At any time that a Policy is in effect, a Policyowner may
elect to surrender the Policy and receive its Surrender Value. A surrender
charge is calculated upon issuance of the Policy and upon each increase in
Face Amount. The surrender charge is only imposed if less than 10 years have
elapsed from the Date of Issue or any increase in the Face Amount and you
request a full surrender or a decrease in Face Amount.

The maximum surrender charge calculated upon issuance of the Policy is equal
to the sum of (a) plus (b) where (a) is a deferred administrative charge
equal to $8.50 per thousand dollars of the initial Face Amount and (b) is a
deferred sales charge equal to 30% of the Guideline Annual Premium. In
accordance with limitations under state insurance regulations, the amount of
the maximum surrender charge will not exceed a specified amount per $1,000 of
initial Face Amount, as indicated in "APPENDIX D - CALCULATION OF MAXIMUM
SURRENDER CHARGES." The maximum surrender charge remains level for the first
44 Policy months, reduces by 1% per month for the next 76 Policy months, and
is zero thereafter. If you surrender the Policy before making premium
payments associated with the initial Face Amount which are at least equal to
the Guideline Annual Premium, the actual surrender charge imposed may be less
than the maximum. See "THE POLICY - Surrender" and "CHARGES AND DEDUCTIONS
- -Surrender Charge."

A separate surrender charge will apply to and is calculated for each increase
in Face Amount. The maximum surrender charge for the increase is equal to
the sum of (a) plus (b) where (a) is equal to $8.50 per thousand dollars of
increase, and (b) is equal to 30% of the Guideline Annual Premium for the
increase. In accordance with limitations under state insurance regulations,
the amount of the Surrender Charge will not exceed a Specified amount per
$1,000 of increase, as indicated in "APPENDIX D - CALCULATION OF MAXIMUM
SURRENDER CHARGES." As is true for the initial Face Amount, (a) is a
deferred administrative charge and (b) is a deferred sales charge. This
maximum surrender charge remains level for the first 44 Policy months
following the increase, reduces by 1% per month for the next 76 Policy
months, and is zero thereafter. The actual surrender charge with respect to
the increase may be less than the maximum. See "THE POLICY - Surrender" and
"CHARGES AND DEDUCTIONS - Surrender Charge."

In the event of a decrease in Face Amount, the surrender charge imposed is
proportional to the charge that would apply to a full surrender. See "THE
POLICY - Surrender" and "CHARGES AND DEDUCTIONS - Surrender Charge."

PREMIUM TAX CHARGE - A charge for state and local premium taxes (if any) is
deducted from each premium payment. State premium taxes generally range from
0.75% to 5%, while local premium taxes (if any) vary by jurisdiction within a
state. The premium tax charge will change when either the applicable
jurisdiction changes or the tax rate within the applicable jurisdiction
changes. The Company should be notified of any change in address of the
Insured as soon as possible.

MONTHLY DEDUCTIONS FROM POLICY VALUE - On the Date of Issue and each Monthly
Payment Date thereafter prior to the Final Premium Payment Date, certain
charges ("Monthly Deductions") will be deducted from the Policy Value. The
Monthly Deduction consists of a charge for cost of insurance, a charge for
the cost of any additional benefits provided by rider, and a charge for
administrative expenses. You may instruct the Company to deduct the Monthly
Deduction from one specific Sub-Account. If you do not, the Company will
make a Pro Rata Allocation of the charge. No Monthly Deductions are made on
or after the Final Premium Date.

The monthly cost of insurance charge is determined by multiplying the
Insurance Amount at Risk (the Sum Insured minus the Policy Value) for each
Policy month by the applicable cost of insurance rate or rates. The
Insurance Amount at Risk will be affected by any decreases or increases in
the Face Amount.

As noted above, certain additional insurance rider benefits are available
under the Policy for an additional monthly charge.

<PAGE>

See "APPENDIX A - Optional Benefits."

The monthly administrative charge is described in "CHARGES AND DEDUCTIONS
- -Monthly Deduction From Policy Value."

ADMINISTRATIVE CHARGES - Each of the charges listed below is designed to
reimburse the Company for actual administrative costs incurred. None of
these charges is designed to result in a profit to the Company.

DEFERRED ADMINISTRATIVE CHARGE - A component of the Surrender Charge is a
charge for administrative expenses. This deferred administrative charge is
$8.50 per thousand dollars of the initial Face Amount or of an increase in
Face Amount. The charge is designed to reimburse the Company for
administrative costs associated with product research and development,
underwriting, policy administration, decreasing the Face Amount, and
surrendering a Policy. Because the maximum Surrender Charge reduces by 1%
per month after the 44th Policy month and becomes zero after the 120th month
after Date of Issue or the effective date of an increase in Face Amount, in
certain situations some or all of the deferred administrative charge may not
be assessed upon surrender of the Policy. See "THE POLICY - Surrender" and
"CHARGES AND DEDUCTIONS - Surrender Charge."

MONTHLY ADMINISTRATIVE CHARGES - A component of the Monthly Deduction from
Policy Value is a charge for administrative expense. Prior to the Final
Premium Payment Date, the charge is $5 per month. The charges are designed
to reimburse the Company for the costs associated with issuing and
administering the Policies, such as processing premium payments, policy loans
and loan repayments, change in Sum Insured Options, and death claims. These
charges also help cover the cost of providing annual statements and
responding to Policyholder inquiries. The first twelve charges are higher
than subsequent charges to reimburse the Company for costs associated with
the issuance of the Policy. See "CHARGES AND DEDUCTIONS - Monthly Deduction
From Policy Value."

TRANSACTION CHARGE ON PARTIAL WITHDRAWALS - A transaction charge, which is
the smaller of 2% of the amount withdrawn or $25, is assessed at the time of
each partial withdrawal to reimburse the Company for the cost of processing
the withdrawal. In addition to the transaction charge, a partial withdrawal
charge may also be made under certain circumstances. See "CHARGES AND
DEDUCTIONS -Charges On Partial Withdrawal."

CHARGE FOR INCREASE IN FACE AMOUNT - For each increase in Face Amount, a
charge of $50 will be deducted from Policy Value. This charge is designed to
reimburse the Company for underwriting and administrative costs associated
with the increase. See "THE POLICY - Change In Face Amount" and "CHARGES AND
DEDUCTIONS - Charge For Increase In Face Amount."

TRANSFER CHARGE - The first six transfers of Policy Value in a Policy year
will be free of charge. Thereafter, with certain exceptions, a transfer
charge of $10 will be imposed for each transfer request to reimburse the
Company for the costs of processing the transfer. See "THE POLICY - Transfer
Privilege" and "CHARGES AND DEDUCTIONS - Transfer Charges."

OTHER ADMINISTRATIVE CHARGES - The Company reserves the right to impose a
charge for the administrative costs associated with changing the Net Premium
allocation instructions, for changing the allocation of any Monthly
Deductions among the various Sub-Accounts, or for a projection of values.
See "CHARGES AND DEDUCTIONS - Other Administrative Charges."

CHARGES AGAINST THE VEL ACCOUNT - A daily charge equivalent to an effective
annual rate of 0.90% of the average daily net asset value of each Sub-Account
of the VEL Account is imposed to compensate the Company for its assumption of
certain mortality and expense risks. See "CHARGES AND DEDUCTIONS - Charges
Against Assets Of The VEL Account."

CHARGES OF THE UNDERLYING INVESTMENT COMPANIES - In addition to the charges
described above, certain fees and expenses are deducted from the assets of
the Underlying Investment Companies. See "CHARGES AND DEDUCTIONS - Charges
Against Assets Of The VEL Account." The levels of fees and expenses vary
among the Underlying Investment Companies.

POLICY VALUE AND SURRENDER VALUE - The Policy Value is the total amount
available for investment under a Policy at any time. It is the sum of the
value of all Accumulation Units in the Sub-Accounts of the VEL Account and
all accumulations in the General Account of the Company credited to the
Policy. The Policy Value reflects the amount and frequency of Net Premiums
paid, charges and deductions imposed under the Policy, interest credited to
accumulations in the General Accounts, investment performance of the
Sub-Account(s) to which Policy Value has been allocated, and partial
withdrawals. The Policy Value may be relevant to the computation of the
Death Proceeds. You bear the entire investment risk for amounts allocated to
the VEL Account. The Company does not guarantee a minimum Policy Value.

The Surrender Value will be the Policy Value, less any Debt and surrender
charges. The Surrender Value is relevant, for

<PAGE>

example, in the computation of the amounts available upon partial
withdrawals, Policy loans or surrender.

DEATH PROCEEDS - The Policy provides for the payment of certain Death
Proceeds to the named Beneficiary upon the death of the Insured. Prior to
the Final Premium Payment Date, the Death Proceeds will be equal to the Sum
Insured, reduced by any outstanding Debt, partial withdrawals, partial
withdrawal charges, and any Monthly Deductions due and not yet deducted
through the policy month in which the Insured dies. Two Sum Insured Options
are available. Under Option 1, the Sum Insured is the greater of the Face
Amount of the Policy or the Guideline Minimum Sum Insured. Under Option 2,
the Sum Insured is the greater of the Face Amount of the Policy plus the
Policy Value or the Guideline Minimum Sum Insured. The Guideline Minimum Sum
Insured is equivalent to a percentage (determined each month based on the
Insured's Age) of the Policy Value. On or after the Final Premium Payment
Date, the Death Proceeds will equal the Surrender Value. See "THE POLICY -
Death Proceeds."

The Death Proceeds under the Policy may be received in a lump sum or under
one of the Payment Options described in the Policy. See "APPENDIX B -
Payment Options."

FLEXIBILITY TO ADJUST SUM INSURED - Subject to certain limitations, you may
adjust the Sum Insured, and thus the Death Proceeds, at any time prior to the
Final Premium Payment Date, by increasing or decreasing the Face Amount of
the Policy. Any change in the Face Amount will affect the monthly cost of
insurance charges and the amount of the surrender charge. If the Face Amount
is decreased, a pro rata surrender charge may be imposed. The Policy Value
is reduced by the amount of the charge. See "THE POLICY - Change In Face
Amount."

The minimum increase in Face Amount is $10,000, and any increase may also
require additional Evidence of Insurability satisfactory to the Company. The
increase is subject to a "free look period" and, during the first 24 months
after the increase, to a conversion privilege. See "THE POLICY - Free Look
Period, - Conversion Privileges."

ADDITIONAL INSURANCE BENEFITS - You have the flexibility to add additional
insurance benefits by rider. These include the Waiver of Premium Rider,
Accidental Death Benefit Rider, Guaranteed Insurability Rider, Other Insured
Rider, Children's Insurance Rider, Exchange Option Rider and Living Benefits
Rider. See "APPENDIX A - Optional Benefits."

The cost of these optional insurance benefits will be deducted from Policy
Value as part of the Monthly Deduction. See "CHARGES AND DEDUCTIONS -
Monthly Deduction From Policy Value."

POLICY ISSUANCE - If at the time of application you make a payment equal to
at least one Monthly Deduction for the Policy as applied for, the Company
will provide conditional insurance, equal to the amount applied for but not
to exceed $500,000. If the application is approved, the Policy will be
issued as of the date the terms of the conditional insurance agreement are
met. If you do not wish to make any payment at the time of application,
insurance coverage will not be in force until delivery of the Policy and
payment of sufficient premium during the lifetime of the Insured.

If any premiums are paid prior to the issuance of the Policy, such premiums
will be held in the Company's General Account. If your application is
approved and the Policy is issued and accepted, the initial premiums held in
the General Account will be credited with interest at a specified rate
beginning not later than the date of receipt of the premiums at the Company's
Principal Office. IF A POLICY IS NOT ISSUED AND ACCEPTED, THE INITIAL
PREMIUMS WILL BE RETURNED TO YOU WITHOUT INTEREST.

Upon completion of issuance procedures, delivery of the Policy, and receipt
of any additional premiums, if less than $10,000 of initial Net Premiums have
been received by the Company, such Net Premiums will be allocated to the
Sub-Accounts according to your instructions. Generally, if initial Net
Premiums equal or exceed $10,000, or if the Policy provides for planned
premium payments during the first year equal to or exceeding $10,000
annually, $5,000 semi-annually, $2,500 quarterly or $1,000 monthly, the
entire Net Premium plus any interest earned will be allocated to the
Sub-Accounts upon return to the Company of a Delivery Receipt. Thereafter,
such amounts will be allocated to the Sub-Accounts as instructed. See "THE
POLICY - Application For A Policy."

ALLOCATION OF NET PREMIUMS - Net Premiums are the premiums paid less the
actual premium tax. Net Premiums may be allocated to one or more
Sub-Accounts of the VEL Account, to the General Account, or to any
combination of Accounts. You bear the investment risk of Net Premiums
allocated to the Sub-Accounts. Allocations may be made to no more than seven
Sub-Accounts at any one time. The minimum allocation is 1% of Net Premium.
All allocations must be in whole numbers and must total 100%. See "THE
POLICY - Allocation Of Net Premiums."

Premiums allocated to the Company's General Account will earn a fixed rate of
interest. Net Premiums and minimum interest are guaranteed by the Company.
For more information, see "MORE INFORMATION ABOUT THE GENERAL ACCOUNT."

INVESTMENT OPTIONS - The Policies permit Net Premiums to be allocated either
to the Company's General Account or to the VEL Account. The VEL Account is
currently comprised of nineteen Sub-Accounts ("Sub-Accounts"). Of these

<PAGE>

nineteen Sub-Accounts, eighteen are available to the Policies. Each
Sub-Account invests exclusively in a corresponding Underlying Fund of the
Allmerica Investment Trust ("Trust") managed by Allmerica Investment, the
Variable Insurance Products Fund ("VIP") or the Variable Insurance Products
Fund II ("VIP II") managed by Fidelity Management, T. Rowe Price
International Series, Inc. ("T. Rowe Price") managed by Rowe Price-Fleming
International, Inc. with respect to the International Stock Portfolio or the
Delaware Group Premium Fund, Inc. ("DGPF") managed by Delaware International
with respect to the International Equity Series. In some states, insurance
regulations may restrict the availability of particular Underlying Funds.
The Policies permit you to transfer Policy Value among the available
Sub-Accounts and between the Sub-Accounts and the General Account of the
Company, subject to certain limitations described under "THE POLICY -
Transfer Privilege."

The Trust, VIP, VIP II, T. Rowe Price and DGPF are open-end, diversified
series management investment companies. Eleven different Underlying Funds of
the Trust (each a "Fund") are available under the Policies: the Growth Fund,
Investment Grade Income Fund, Money Market Fund, Equity Index Fund,
Government Bond Fund, Select International Equity Fund, Select Aggressive
Growth Fund, Select Capital Appreciation Fund, Select Growth Fund, Select
Growth and Income Fund and Small Cap Value Fund. Four different Underlying
Funds of VIP (each a "Portfolio") are available under the Policies: High
Income Portfolio, Equity-Income Portfolio, Growth Portfolio and Overseas
Portfolio. One Underlying Fund of VIP II ("Portfolio") is available under
the Policies: the Asset Manager Portfolio. One Underlying Fund of T. Rowe
Price ("Portfolio") is available under the Policies: the International Stock
Portfolio. One Underlying Fund of DGPF ("Series") is available under the
Policies: the International Equity Series.

Each of the Underlying Funds has its own investment objectives. However,
certain Portfolios have investment objectives similar to certain Funds or
Series.

The value of each Sub-Account will vary daily depending upon the performance
of the Underlying Fund in which it invests. Each Sub-Account reinvests
dividends or capital gains distributions received from an Underlying Fund in
additional shares of that Underlying Fund.

There can be no assurance that the investment objectives of the Underlying
Funds can be achieved. For more information, see "DESCRIPTION OF THE
COMPANY, THE VEL ACCOUNT, ALLMERICA INVESTMENT TRUST, VARIABLE INSURANCE
PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II, T. ROWE PRICE
INTERNATIONAL SERIES, INC. AND DELAWARE GROUP PREMIUM FUND, INC."

FREE LOOK PERIOD - The Policy provides for an initial Free Look Period. You
may cancel the Policy by mailing or delivering it to the Principal Office or
to an agent of the Company on or before the latest of (a) 45 days after the
application for the Policy is signed, (b) 10 days after you receive the
Policy, or (c) 10 days after the Company mails or personally delivers a
Notice of Withdrawal Rights to you. Upon returning the Policy you will
receive a refund equal to the sum of (1) the difference between the premium,
including fees and charges paid, and any amount allocated to the VEL Account,
and (2) the value of the amounts allocated to the VEL Account, and (3) any
fees or charges imposed on the amounts allocated to the VEL Account. The
amount refunded in (1) above includes any premiums allocated to the General
Account. However, where required by state law, the Company will refund the
entire amount of premiums paid. A free look privilege also applies after a
requested increase in Face Amount. See "THE POLICY - Free Look Period."

CONVERSION PRIVILEGES - During the first 24 Policy months after the Date of
Issue, subject to certain restrictions, you may convert this Policy to a
flexible premium fixed adjustable life insurance Policy by simultaneously
transferring all accumulated value in the Sub-Accounts to the General Account
and instructing the Company to allocate all future premiums to the General
Account. A similar conversion privilege is in effect for 24 Policy months
after the date of an increase in Face Amount. Where required by state law,
and at your request, the Company will issue a flexible premium adjustable
life insurance policy to you. The new policy will have the same face amount,
issue age, date of issue, and risk classifications as the original Policy.
See "THE POLICY - Conversion Privileges."

PARTIAL WITHDRAWAL - After the first Policy year, you may make partial
withdrawals in a minimum amount of $500 from the Policy Value. Under Option
1, the Face Amount is reduced by the amount of the partial withdrawal, and a
partial withdrawal will not be allowed if it would reduce the Face Amount
below $40,000.

A transaction charge which is described in "CHARGES AND DEDUCTIONS - Charges
On Partial Withdrawal," will be assessed to reimburse the Company for the
cost of processing each partial withdrawal. A partial withdrawal charge may
also be imposed upon a partial withdrawal. Generally, amounts withdrawn
during each Policy year in excess of 10% of the Policy Value ("excess
withdrawal") are subject to the partial withdrawal charge. The partial
withdrawal charge is equal to 5% of the excess withdrawal up to the surrender
charge on the date of withdrawal. If no surrender charge is applicable at
the time of withdrawal, no partial withdrawal charge will be deducted. The
Policy's outstanding surrender charge will be reduced by the amount of the
partial withdrawal charge deducted. See "THE POLICY - Partial Withdrawal" and
"CHARGES AND DEDUCTIONS - Charges On Partial Withdrawal."

LOAN PRIVILEGE - You may borrow against the Policy Value. The total amount
you may borrow is the Loan Value.

<PAGE>

Loan Value in the first Policy Year is 75%
of an amount equal to Policy Value less surrender charge, Monthly Deductions,
and interest on Debt to the end of the Policy year. Thereafter, Loan Value
is 90% of an amount equal to Policy Value less the surrender charge.

Policy loans will be allocated among the General Account and the Sub-Accounts
in accordance with your instructions. If no allocation is made by you, the
Company will make a Pro Rata Allocation among the Accounts. In either case,
Policy Value equal to the Policy loan will be transferred from the appropriate
Sub-Account(s) to the General Account, and will earn monthly interest at an
effective annual rate of at least 6%. Therefore, a Policy loan may have a
permanent impact on the Policy Value even though it is eventually repaid.
Although the loan amount is a part of the Policy Value, the Death Proceeds will
be reduced by the amount of outstanding Debt at the time of death.

Policy loans will bear interest at a fixed rate of 8% per year, due and
payable in arrears at the end of each Policy year. If interest is not paid
when due, it will be added to the loan balance. Policy loans may be repaid
at any time. You must notify the Company if a payment is a loan repayment;
otherwise, it will be considered a premium payment. Any partial or full
repayment of Debt by you will be allocated to the General Account or
Sub-Accounts in accordance with your instructions. If you do not specify an
allocation, the Company will allocate the loan repayment in accordance with
your most recent premium allocation instructions. See "POLICY LOANS."

POLICY LAPSE AND REINSTATEMENT - The failure to make premium payments will
not cause a Policy to lapse unless: (a) the Surrender Value is insufficient
to cover the next Monthly Deduction plus loan interest accrued, if any, or
(b) Debt exceeds Policy Value. A 62-day grace period applies to each
situation. Subject to certain conditions (including Evidence of Insurability
showing that the Insured is insurable according to the Company's underwriting
rules and the payment of sufficient premium), a Policy may be reinstated at
any time within 3 years after the expiration of the grace period and prior to
the Final Premium Payment Date. See "POLICY TERMINATION AND REINSTATEMENT."

TAX TREATMENT - A Policy is generally subject to the same federal income tax
treatment as a conventional fixed benefit life insurance policy. Under
current tax law, to the extent there is no change in benefits, you will be
taxed on Policy Value withdrawn from the Policy only to the extent that the
amount withdrawn exceeds the total premiums paid. Withdrawals in excess of
premiums paid will be treated as ordinary income. During the first 15 Policy
years, however, an "interest first" rule applies to any distribution of cash
that is required under Section 7702 of the Internal Revenue Code because of a
reduction in benefits under the Policy. Death Proceeds under the Policy are
excludable from the gross income of the Beneficiary, but in some
circumstances the Death Proceeds or the Policy Value may be subject to
federal estate tax. See "FEDERAL TAX CONSIDERATIONS - Taxation Of The
Policies."

A Policy offered by this prospectus may be considered a "modified endowment
contract" if it fails a "seven- pay" test. A Policy fails to satisfy the
seven-pay test if the cumulative premiums paid under the Policy at any time
during the first seven Policy years exceeds the sum of the net level premiums
that would have been paid, had the Policy provided for paid-up future
benefits after the payment of seven level premiums. If the Policy is
considered a modified endowment contract, all distributions (including policy
loans, partial withdrawals, surrenders or assignments) will be taxed on an
"income-first" basis. With certain exceptions, an additional 10% penalty will
be imposed on the portion of any distribution that is includible in income.
For more information, see "FEDERAL TAX CONSIDERATIONS - Modified Endowment
Contracts."

---------------

The purpose of the Policy is to provide insurance protection for the
Beneficiary named therein. This Summary is intended to provide only a very
brief overview of the more significant aspects of the Policy. Further detail
is provided in this prospectus and in the Policy. No claim is made that the
Policy is in any way similar or comparable to a systematic investment plan of
a mutual fund. The Policy together with its attached application constitutes
the entire agreement between the Company and you.

<PAGE>

PERFORMANCE INFORMATION

The Policies were first offered to the public in 1991. However, the Company
may advertise "Total Return" and "Average Annual Total Return" performance
information based on the periods that the Underlying Funds have been in
existence. The results for any period prior to the Policies being offered
will be calculated as if the Policies had been offered during that period of
time, with all charges assumed to be those applicable to the Sub-Accounts,
the Underlying Funds, and (in Table I) under a "representative" Policy that
is surrendered at the end of the applicable period. FOR MORE INFORMATION ON
CHARGES UNDER THE POLICIES, SEE CHARGES AND DEDUCTIONS.

In each Table below, "One-Year Total Return" refers to the total of the
income generated by a sub-account, based on certain charges and assumptions
as described in the respective tables, for the one-year period ended December
31, 1995. "Average Annual Total Return" is based on the same charges and
assumptions, but reflects the hypothetical annually compounded return that
would have produced the same cumulative return if the Sub-Account's
performance had been constant over the entire period. Because average annual
total returns tend to smooth out variations in annual performance return,
they are not the same as actual year-by-year results.

TABLE I: SUB-ACCOUNT PERFORMANCE
NET OF ALL CHARGES AND ASSUMING SURRENDER OF THE POLICY
-------------------------------------------------------

The following performance information is based on the periods that the
Underlying Funds have been in existence. The data is net of expenses of the
Underlying Funds, all Sub-Account charges, and all Policy charges (including
surrender charges) for a representative Policy. It is assumed that the
Insured is male, Age 36, standard (nonsmoker) Premium Class, that the Face
Amount of the Policy is $250,000, that an annual premium payment of $3,000
(approximately one Guideline Annual Premium) was made at the beginning of
each Policy year, that ALL premiums were allocated to EACH Sub-Account
individually, and that there was a full surrender of the Policy at the end of
the applicable period.

Average Annual Total Return as of 12/31/95
-------------------------------------------
Sub- Underlying One-Year 3 years 5 years Since Years Since
Account Fund Total return Inception Inception*
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Growth -82.99% -14.27% -5.45% 11.54% 10.00
2 Investment Grade -96.54% -19.47% -1.92% 5.53% 10.00
3 Money Market -100.00% -24.55% -8.17% 1.82% 10.00
4 Equity Index -79.92% -11.43% -1.70% -6.78% 5.26
5 Government Bond -100.00% -21.77% N/A -8.15% 4.35
6 Select Aggressive Growth -83.46% -10.30% N/A -1.38% 3.36
7 Select Growth -90.43% -20.54% N/A -13.62% 3.36
8 Select Growth and Income -85.23% -13.27% N/A -11.59% 3.36
9 Small Cap Value -96.76% N/A N/A -24.25% 2.67
11 Select Int'l Equity -94.92% N/A N/A -60.18% 1.67
12 Select Cap. Appreciation N/A N/A N/A -83.34% 0.67
102 VIP High Income -93.93% -13.91% 8.29% 7.87% 10.00
103 VIP Equity Income -80.91% -5.44% 10.95% 8.70% 9.23
104 VIP Growth -80.67% -8.17% 10.35% 10.28% 9.23
105 VIP Overseas -100.00% -10.65% -3.98% 1.98% 8.92
106 VIP II Asset Manager -97.34% -17.19% 1.37% 3.21% 6.32
150 T. Rowe Price Int'l Stock -100.00% N/A N/A -66.51% 1.58
207 DGPF Int'l Equity -100.00% N/A N/A -17.12% 3.17

</TABLE>

Performance information reflects only the performance of a hypothetical
investment during the particular time period on which the calculations are
based. One-Year total return and average annual total return figures are
based on historical earnings and are not intended to indicate future
performance. Performance information should be considered in light of the
investment objectives and policies, characteristics and quality of the
portfolio of the Underlying Fund in which a Sub-Account invests and the
market conditions during the given time period, and should not be considered
as a representation of what may be achieved in the future.

11
<PAGE>

TABLE II: SUB-ACCOUNT PERFORMANCE
EXCLUDING MONTHLY POLICY CHARGES AND SURRENDER CHARGES
------------------------------------------------------

The following performance information is based on the periods that the
Underlying Funds have been in existence. The performance information is net
of total Underlying Fund expenses, all Sub-Account charges, and premium tax
and expense charges. THE DATA DOES NOT REFLECT MONTHLY CHARGES UNDER THE
POLICIES OR SURRENDER CHARGES. It is assumed that an annual premium payment
of $3,000 (approximately one Guideline Annual Premium) was made at the
beginning of each Policy year and that ALL premiums were allocated to EACH
Sub-Account individually.

1 Growth 31.93% 11.62% 15.61% 14.61% 10.00
2 Investment Grade 17.07% 7.50% 9.17% 8.82% 10.00
3 Money Market 5.15% 3.57% 3.87% 5.27% 10.00
4 Equity Index 35.29% 13.91% 9.36% 16.15% 5.26
5 Government Bond 12.32% 5.71% N/A 7.01% 4.35
6 Select Aggressive Growth 31.41% 14.83% N/A 19.37% 3.36
7 Select Growth 23.77% 6.66% N/A 9.29% 3.36
8 Select Growth and Income 29.47% 12.42% N/A 10.93% 3.36
9 Small Cap Value 16.83% N/A N/A 9.42% 2.67
11 Select Int'l Equity 18.85% N/A N/A 8.30% 1.67
12 Select Cap. Appreciation N/A N/A N/A 38.95% 0.67
102 VIP High Income 19.93% 11.91% 18.14% 11.07% 10.00
103 VIP Equity Income 34.21% 18.82% 20.53% 12.59% 9.23
104 VIP Growth 34.47% 16.57% 19.99% 14.08% 9.23
105 VIP Overseas 8.96% 14.54% 7.41% 6.61% 8.92
106 VIP II Asset Manager 16.19% 9.29% 12.02% 10.51% 6.32
150 T. Rowe Price Int'l Stock 10.45% N/A N/A 6.61% 1.58
207 DGPF Int'l Equity 12.98% N/A N/A 8.00% 3.17

</TABLE>

Performance information reflects only the performance of a hypothetical
investment during the particular time period on which the calculations are
based. One-year total return and average annual total return figures are
based on historical earnings and are not intended to indicate future
performance. Performance information should be considered in light of the
investment objectives and policies, characteristics and quality of the
portfolio of the Underlying Fund in which a Sub-Account invests and the
market conditions during the given time period, and should not be considered
as a representation of what may be achieved in the future.

- - - -

*The inception dates for the Underlying Funds are: 4/29/85 for Growth,
Investment Grade and Money Market; 9/28/90 for Equity Index; 8/26/91 for
Government Bond; 8/21/92 for Select Aggressive Growth, Select Growth, and
Select Growth and Income; 4/30/93 for Small Cap Value; 5/01/94 for Select
International Equity; 4/28/95 for Select Capital Appreciation: 10/09/86 for VIP
Equity-Income and VIP Growth; 9/19/85 for VIP High Income; 1/28/87 for VIP
Overseas; 9/06/89 for VIP II Asset Manager; 10/29/92 for DGPF International
Equity; and 3/31/94 for the T. Rowe Price International Stock.

Performance information may be compared, in reports and promotional
literature, to: (i) the Standard & Poor's 500 Stock Index ("S & P 500"), Dow
Jones Industrial Average ("DJIA"), Shearson Lehman Aggregate Bond Index or
other unmanaged indices so that investors may compare results with those of a
group of unmanaged securities widely regarded by investors as representative
of the securities markets in general; (ii) other groups of variable life
separate accounts or other investment products tracked by Lipper Analytical
Services, a widely used independent research firm which ranks mutual funds
and other investment products by overall performance, investment objectives,
and assets, or tracked by other services, companies, publications, or
persons, such as Morningstar, Inc., who rank such investment products on
overall performance or other criteria; or (iii) the Consumer Price Index (a
measure for inflation) to assess the real rate of return from an investment.
Unmanaged indices may assume the reinvestment of dividends but generally do
not reflect deductions for administrative and management costs and expenses.

The Company may provide information on various topics of interest to
Policyowners and prospective Policyowners in sales literature, periodic
publications or other materials. These topics may include the relationship
between sectors of the economy and the economy as a whole and its effect on
various securities markets, investment strategies and techniques (such as
value investing, market timing, dollar cost averaging, asset allocation,
constant ratio transfer and account rebalancing), the advantages and
disadvantages of investing in tax-deferred and taxable investments, customer
profiles and hypothetical purchase and investment scenarios, financial
management and tax and retirement planning, and investment alternatives to
certificates of deposit and other financial instruments.

<PAGE>

DESCRIPTION OF THE COMPANY, THE VEL ACCOUNT, ALLMERICA INVESTMENT TRUST,
VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II
T. ROWE PRICE INTERNATIONAL SERIES, INC. AND
DELAWARE GROUP PREMIUM FUND, INC.

THE COMPANY - The Company is a life insurance company organized under the
laws of Delaware in July, 1974. Its Principal Office is located at 440
Lincoln Street, Worcester, Massachusetts 01653, Telephone 508-855-1000. The
Company is subject to the laws of the state of Delaware governing insurance
companies and to regulation by the Commissioner of Insurance of Delaware. In
addition, the Company is subject to the insurance laws and regulations of
other states and jurisdictions in which it is licensed to operate.

Effective October 1, 1995, the Company changed its name from SMA Life
Assurance Company to Allmerica Financial Life Insurance and Annuity Company.
The Company is an indirect wholly-owned subsidiary of First Allmerica
Financial Life Insurance Company ("First Allmerica"), which in turn is a
wholly-owned subsidiary of Allmerica Financial Corporation ("AFC"). First
Allmerica, originally organized under the laws of Massachusetts in 1844 as a
mutual life insurance company and known as State Mutual Life Assurance
Company of America, converted to a stock life insurance company on October
16, 1995 and adopted its present name. First Allmerica is the fifth oldest
life insurance company in America.

THE VEL ACCOUNT - The VEL Account was authorized by vote of the Board of
Directors of the Company on April 2, 1987. The VEL Account is registered
with the Securities and Exchange Commission ("Commission") as a unit
investment trust under the Investment Company Act of 1940 ("1940 Act"). Such
registration does not involve the supervision of its management or investment
practices or policies of the VEL Account or the Company by the Commission.

The assets used to fund the variable portion of the Policies are set aside in
the VEL Account and are kept separate and apart from the general assets of
the Company. Under Delaware law, assets equal to the reserves and other
liabilities of the VEL Account may not be charged with any liabilities
arising out of any other business of the Company. The VEL Account currently
has nineteen Sub-Accounts, of which eighteen are available to the Policies.
Each Sub-Account is administered and accounted for as part of the general
business of the Company, but the income, capital gains, or capital losses of
each Sub-Account are allocated to such Sub-Account, without regard to other
income, capital gains, or capital losses of the Company or the other
Sub-Accounts. Each Sub-Account invests exclusively in a corresponding
investment portfolio of the Allmerica Investment Trust, the Variable
Insurance Products Fund, the Variable Insurance Products Fund II, T. Rowe
Price International Series, Inc. or the Delaware Group Premium Fund, Inc.
("Underlying Investment Companies").

The Company reserves the right, subject to compliance with applicable law, to
change the names of the Sub-Accounts and VEL Account.

ALLMERICA INVESTMENT TRUST - Allmerica Investment Trust, (the "Trust") is an
open-end, diversified management investment company registered with the
Commission under the 1940 Act. Such registration does not involve
supervision by the Commission of the investments or investment policy of the
Trust or its separate investment Funds.

The Trust was established by First Allmerica as a Massachusetts business
trust on October 11, 1984, for the purpose of providing a vehicle for the
investment of assets of various separate accounts established by First
Allmerica, the Company, or other affiliated insurance companies. Eleven
investment portfolios of the Trust ("Funds") are available under the
Policies, each issuing a series of shares: the Growth Fund, Investment Grade
Income Fund, Money Market Fund, Equity Index Fund, Government Bond Fund,
Select International Equity Fund, Select Aggressive Growth Fund, Select
Capital Appreciation Fund, Select Growth Fund, Select Growth and Income Fund
and Small Cap Value Fund. The assets of each Fund are held separate from the
assets of the other Funds. Each Fund operates as a separate investment
vehicle and the income or losses of one Fund generally have no effect on the
investment performance of another Fund. Shares of the Trust are not offered
to the general public but solely to such separate accounts.

Allmerica Investment serves as investment adviser of the Trust and has
entered into sub-advisory agreements with other investment managers
("Sub-Advisers") who manage the investments of the Funds. See "INVESTMENT
ADVISORY SERVICES TO THE TRUST."

VARIABLE INSURANCE PRODUCTS FUND - Variable Insurance Products Fund ("VIP"),
managed by Fidelity Management & Research Company ("Fidelity Management"), is
an open-end, diversified, management investment company organized as a
Massachusetts business trust on November 13, 1981 and registered with the
Commission under the 1940 Act. Four of its investment portfolios are
available under the Policies: High Income Portfolio, Equity-Income Portfolio,
Growth Portfolio and Overseas Portfolio.

<PAGE>

Various Fidelity companies perform certain activities required to operate
VIP. Fidelity Management, a registered investment adviser under the
Investment Advisers Act of 1940, is one of America's largest investment
management organizations and has its principal business address at 82
Devonshire Street, Boston MA. It is composed of a number of different
companies, which provide a variety of financial services and products.
Fidelity Management is the original Fidelity company, founded in 1946. It
provides a number of mutual funds and other clients with investment research
and portfolio management services. The Portfolios of VIP as part of their
operating expenses pay an investment management fee to Fidelity Management.
See "INVESTMENT ADVISORY SERVICES TO VIP AND VIP II."

VARIABLE INSURANCE PRODUCTS FUND II - Variable Insurance Products Fund II
("VIP II"), managed by Fidelity Management (see discussion under "VARIABLE
INSURANCE PRODUCTS FUND"), is an open-end, diversified, management investment
company organized as a Massachusetts business trust on March 21, 1988 and
registered with the Commission under the 1940 Act. One of its investment
portfolios is available under the Policies: the Asset Manager Portfolio.

T. ROWE PRICE INTERNATIONAL SERIES, INC. - T. Rowe Price International
Series, Inc. ("T. Rowe Price"), managed by Rowe Price-Fleming International,
Inc. ("Price-Fleming") (See "INVESTMENT ADVISORY SERVICES TO T. ROWE PRICE"),
is an open-end, diversified, management investment company organized as a
Maryland corporation in 1994 and registered with the Commission under the
1940 Act. One of its investment portfolios is available under the Policies:
the International Stock Portfolio.

DELAWARE GROUP PREMIUM FUND, INC. - Delaware Group Premium Fund, Inc.
("DGPF") is an open-end, diversified management investment company registered
with the Commission under the 1940 Act. Such registration does not involve
supervision by the Commission of the investments or investment policy of DGPF
or its separate investment series.

DGPF was established to provide a vehicle for the investment of assets of
various separate accounts supporting variable insurance policies. One
investment portfolio ("Series") is available under the Policies, the
International Equity Series.

The investment adviser for the International Equity Series is Delaware
International Advisers Ltd. ("Delaware International"). See "INVESTMENT
ADVISORY SERVICES TO DGPF."

INVESTMENT OBJECTIVES AND POLICIES - A summary of investment objectives of
each of the Underlying Funds is set forth below. MORE DETAILED INFORMATION
REGARDING THE INVESTMENT OBJECTIVES, RESTRICTIONS AND RISKS, EXPENSES PAID BY
THE UNDERLYING FUNDS AND OTHER RELEVANT INFORMATION REGARDING THE UNDERLYING
INVESTMENT COMPANIES MAY BE FOUND IN THEIR RESPECTIVE PROSPECTUSES, WHICH
ACCOMPANY THIS PROSPECTUS AND SHOULD BE READ CAREFULLY BEFORE INVESTING. The
statements of additional information of the Underlying Funds are available
upon request. There can be no assurance that the investment objectives of
the Underlying Funds can be achieved.

SUB-ACCOUNT 1 - invests solely in shares of the Growth Fund of the Trust.
The Growth Fund is invested in common stocks and securities convertible into
common stocks that are believed to represent significant underlying value in
relation to current market prices. The objective of the Growth Fund is to
achieve long-term growth of capital. Realization of current investment
income, if any, is incidental to this objective.

SUB-ACCOUNT 2 - invests solely in shares of the Investment Grade Income Fund
of the Trust. The Investment Grade Income Fund is invested in a diversified
portfolio of fixed income securities with the objective of seeking as high a
level of total return (including both income and realized and unrealized
capital gains) as is consistent with prudent investment management.

SUB-ACCOUNT 3 - invests solely in shares of the Money Market Fund of the
Trust. The Money Market Fund is invested in a diversified portfolio of
high-quality, short-term debt instruments with the objective of obtaining
maximum current income consistent with the preservation of capital and
liquidity.

SUB-ACCOUNT 4 - invests solely in shares of the Equity Index Fund of the
Trust. The Equity Index Fund seeks to provide investment results that
correspond generally to the composite price and yield performance of United
States publicly traded common stocks. The Equity Index Fund seeks to achieve
its objective by attempting to replicate the composite price and yield
performance of the Standard & Poor's 500 Composite Stock Price Index.

SUB-ACCOUNT 5 - invests solely in the shares of the Government Bond Fund of
the Trust. The Government Bond Fund has the investment objectives of seeking
high income, preservation of capital and maintenance of liquidity, primarily
through investments in debt instruments issued or guaranteed by the U.S.
Government or its agencies or instrumentalities and in related options,
futures and repurchase agreements.

SUB-ACCOUNT 6 - invests solely in shares of the Select Aggressive Growth Fund
of the Trust. The Select Aggressive Growth Fund seeks above-average capital
appreciation by investing primarily in common stocks of companies which are
believed

<PAGE>

to have significant potential for capital appreciation.

SUB-ACCOUNT 7 - invests solely in shares of the Select Growth Fund of the
Trust. The Select Growth Fund seeks to achieve growth of capital by
investing in a diversified portfolio consisting primarily of common stocks
selected on the basis of their long-term growth potential.

SUB-ACCOUNT 8 - invests solely in shares of the Select Growth and Income Fund
of the Trust. The Select Growth and Income Fund seeks a combination of
long-term growth of capital and current income. The Fund will invest
primarily in dividend-paying common stocks and securities convertible into
common stocks.

SUB-ACCOUNT 9 - invests solely in shares of the Small Cap Value Fund of the
Trust. The Small Cap Value Fund seeks long-term growth by investing
principally in a diversified portfolio of common stocks of smaller,
faster-growing companies considered to be attractively valued in the smaller
company sector of the market.

SUB-ACCOUNT 11 - invests solely in shares of the Select International Equity
Fund of the Trust. The Select International Equity Fund seeks maximum
long-term total return (capital appreciation and income) primarily by
investing in common stocks of established non-U.S. companies.

SUB-ACCOUNT 12- invests solely in shares of the Select Capital Appreciation
Fund of the Trust. The Select Capital Appreciation Fund seeks long-term
growth of capital in a manner consistent with the preservation of capital.
Realization of income is not a significant investment consideration and any
income realized on the Fund's investments will be incidental to its primary
objective. The Fund will invest primarily in common stock of industries and
companies which are experiencing favorable demand for their products and
services, and which operate in a favorable competitive environment and
regulatory climate. The Sub-Adviser for the Select Capital Appreciation Fund
is Janus Capital Corporation.

SUB-ACCOUNT 102 - invests solely in shares of the High Income Portfolio of
VIP. The High Income Portfolio seeks to obtain a high level of current income
by investing primarily in high-yielding, lower-rated fixed-income securities
(commonly referred to as "junk bonds"), while also considering growth of
capital. These securities are often considered to be speculative and involve
greater risk of default or price changes than securities assigned a high
quality rating. For more information about these lower-rated securities, see
"Risks of Lower-Rated Debt Securities" in the VIP prospectus.

SUB-ACCOUNT 103 - invests solely in shares of the Equity-Income Portfolio of
VIP. The Equity-Income Portfolio seeks reasonable income by investing
primarily in income-producing equity securities. In choosing these
securities, the Portfolio will also consider the potential for capital
appreciation. The Portfolio's goal is to achieve a yield which exceeds the
composite yield on the securities comprising the Standard & Poor's 500
Composite Stock Price Index. The Portfolio may invest in high yielding,
lower-rated securities (commonly referred to as "junk bonds") which are
subject to greater risk than investments in higher-rated securities. For a
further discussion of lower-rated securities, please see "Risks of
Lower-Rated Debt Securities" in the VIP prospectus.

SUB-ACCOUNT 104 - invests solely in shares of the Growth Portfolio of VIP.
The Growth Portfolio seeks to achieve capital appreciation. The Portfolio
normally purchases common stocks, although its investments are not restricted
to any one type of security. Capital appreciation may also be found in other
types of securities, including bonds and preferred stocks.

SUB-ACCOUNT 105 - invests solely in shares of the Overseas Portfolio of VIP.
The Overseas Portfolio seeks long-term growth of capital primarily through
investments in foreign securities and provides a means for aggressive
investors to diversify their own portfolios by participating in companies and
economies outside of the United States.

SUB-ACCOUNT 106 - invests solely in shares of the Asset Manager Portfolio of
VIP II. The Asset Manager Portfolio seeks high total return with reduced
risk over the long-term by allocating its assets among domestic and foreign
stocks, bonds and short-term fixed-income instruments.

SUB-ACCOUNT 150 - invests solely in shares of the International Stock
Portfolio of T. Rowe. The International Stock Portfolio seeks long-term
growth of capital through investments primarily in common stocks of
established, non-U.S. companies.

SUB-ACCOUNT 207 - invests solely in shares of the International Equity Series
of DGPF. The International Equity Series seeks long-term growth without
undue risk to principal by investing primarily in equity securities of
foreign issuers providing the potential for capital appreciation and income.

CERTAIN UNDERLYING FUNDS HAVE INVESTMENT OBJECTIVES AND/OR POLICIES SIMILAR
TO THOSE OF CERTAIN OTHER UNDERLYING FUNDS. THEREFORE, TO CHOOSE THE
SUB-ACCOUNTS WHICH WILL BEST MEET YOUR NEEDS AND OBJECTIVES, CAREFULLY READ
THE PROSPECTUSES OF THE TRUST, VIP, VIP II, T. ROWE PRICE AND DGPF ALONG WITH
THIS PROSPECTUS.

<PAGE>

IN SOME STATES, INSURANCE REGULATIONS MAY RESTRICT THE AVAILABILITY OF
PARTICULAR SUB-ACCOUNTS.

If required in your state, in the event of a material change in the
investment policy of a Sub-Account or the Underlying Fund in which it
invests, you will be notified of the change. If you have Policy Value in
that Sub-Account, the Company will transfer it without charge on written
request by you to another Sub-Account or to the General Account. The Company
must receive your written request within sixty (60) days of the later of (1)
the effective date of such change in the investment policy or (2) the receipt
of the notice of your right to transfer. You may then change your premium
and deduction allocation percentages.

INVESTMENT ADVISORY SERVICES TO THE TRUST -The overall responsibility for the
supervision of the affairs of the Trust vests in the Trustees. The Trustees
have entered into a Management Agreement with Allmerica Investment Management
Company, Inc. ("Allmerica Investment"), an indirect wholly-owned subsidiary
of First Allmerica, to handle the day-to-day affairs of the Trust. Allmerica
Investment, subject to review by the Trustees, is responsible for the general
management of the Funds. Allmerica Investment also performs certain
administrative and management services for the Trust, furnishes to the Trust
all necessary office space, facilities, and equipment, and pays the
compensation, if any, of officers and Trustees who are affiliated with
Allmerica Investment.

Other than the expenses specifically assumed by Allmerica Investment under
the Management Agreement, all expenses incurred in the operation of the Trust
are borne by it, including fees and expenses associated with the registration
and qualification of the Trust's shares under the Securities Act of 1933,
other fees payable to the Commission, independent public accountant, legal
and custodian fees, association membership dues, taxes, interest, insurance
premiums, brokerage commission, fees and expenses of the Trustees who are not
affiliated with Allmerica Investment, expenses for proxies, prospectuses, and
reports to shareholders, and other expenses.

Pursuant to the Management Agreement with the Trust, Allmerica Investment has
entered into agreements ("Sub-Adviser Agreements") with other investment
advisers ("Sub-Advisers") under which each Sub-Adviser manages the
investments of one or more of the Funds. Under the Sub-Adviser Agreement,
the Sub-Adviser is authorized to engage in portfolio transactions on behalf
of the applicable Fund, subject to such general or specific instructions as
may be given by the Trustees. The terms of a Sub-Adviser Agreement cannot be
materially changed without the approval of a majority in interest of the
shareholders of the affected Fund.

The Sub-Advisers of each of the Funds are as follows:

Growth Fund Miller, Anderson & Sherrerd
Investment Grade Income Allmerica Asset Management, Inc.
Money Market Fund Allmerica Asset Management, Inc.
Equity Index Fund Allmerica Asset Management, Inc.
Government Bond Fund Allmerica Asset Management, Inc.
Select International Equity Fund Bank of Ireland Asset Management Limited
Select Aggressive Growth Fund Nicholas-Applegate Capital Management
Select Capital Appreciation Fund Janus Capital Corporation
Select Growth Fund United Asset Management Corporation
Select Growth and Income Fund John A. Levin & Co., Inc.
Small Cap Value Fund David L. Babson & Co. Inc.

Allmerica Asset Management, Inc. is an indirect wholly owned subsidiary of
First Allmerica.

For providing its services under the Management Agreement, Allmerica
Investment will receive a fee, computed daily at an annual rate based on the
average daily net asset value of each Fund as follows:

<PAGE>

Fund Net Asset Value Rate
---- --------------- ----
Growth First $50 million 0.60%
$50 - 250 million 0.50%
Over $250 million 0.35%

Investment Grade First $50 million 0.50%
Income $50 - 250 million 0.35%
Over $250 million 0.25%

Money Market First $50 million 0.35%
$50 - 250 million 0.25%
Over $250 million 0.20%

Equity Index First $50 million 0.35%
$50 - 250 million 0.30%
Over $250 million 0.25%

Government Bond * 0.50%

Select International * 1.00%
Equity

Select Aggressive * 1.00%
Growth

Select Capital Appreciation * 1.00%

Select Growth * 0.85%

Select Growth and * 0.75%
Income

Small Cap Value * 0.85%

* For the Government Bond Fund, Select International Equity Fund, Select
Aggressive Growth Fund, Select Capital Appreciation Fund, Select Growth
Fund, Select Growth and Income Fund and Small Cap Value Fund, each
rate applicable to Allmerica Investment does not vary according to the
level of assets in the Fund.

<PAGE>

Allmerica Investment's fee computed for each Fund will be paid from the
assets of such Fund. Allmerica Investment is solely responsible for the
payment of all fees for investment management services to the Sub-Advisers,
who will receive from Allmerica Investment a fee, computed daily at an annual
rate based on the average daily net asset value of each Fund as follows:

Sub-Adviser Fund Net Asset Value Rate
----------- ---- --------------- -----

Miller, Anderson Growth * *
& Sherrerd

Allmerica Asset Investment Grade ** 0.20%
Management, Inc. Income

Allmerica Asset Money Market ** 0.10%
Management, Inc.

Allmerica Asset Equity Index ** 0.10%
Management, Inc.

Allmerica Asset Government Bond ** 0.20%
Management, Inc.

Bank of Ireland Asset Select Int'l Equity First $50 million 0.45%
Management Limited Next $50 million 0.40%
Over $100 million 0.30%

Nicholas-Applegate Select Aggressive ** 0.60%
Capital Management Growth

Janus Capital Select Capital First $100 million 0.60%
Corporation Appreciation Over $100 million 0.55%

United Asset Management Select Growth First $50 million 0.50%
Corporation $50 - 100 million 0.45%
$150 - 250 million 0.35%
$250 - 350 million 0.30%
Over $350 million 0.25%

John A. Levin & Co., Inc. Select Growh First $100 million 0.40%
and Income Next $200 million 0.25%
Over $300 million 0.30%

David L. Babson & Co. Small Cap Value ** 0.50%

* Allmerica Investment will pay a fee to Miller, Anderson & Sherrerd
based on the aggregate assets of the Growth Fund and certain other
accounts of First Allmerica and its affiliates (collectively,
the "Affiliated Accounts") which are managed by Miller, Anderson &
Sherrerd, under the following schedule:

Aggregate Average Net Assets Rate
---------------------------- ----

First $50 million 0.500%
$50 - 100 million 0.375%
$100 - 500 million 0.250%
$500 - 850 million 0.200%
Over $850 million 0.150%

** For the Investment Grade Income Fund, Money Market Fund, Equity Index
Fund, Government Bond Fund, Select Aggressive Growth Fund and Small
Cap Value Fund, each rate applicable to the Sub-Advisers does not
vary according to the level of assets in the Fund.

The Prospectus of the Trust contains additional information concerning
the Funds, including information concerning

18
<PAGE>

additional expenses paid by the Funds, and should be read in conjunction with
this Prospectus.

INVESTMENT ADVISORY SERVICES TO VIP AND VIP II - For managing investments
and business affairs, each Portfolio pays a monthly fee to Fidelity
Management. The Prospectuses of VIP and VIP II contain additional information
concerning the Portfolios, including information concerning additional
expenses paid by the Portfolios, and should be read in conjunction with this
Prospectus.

VIP AND VIP II PORTFOLIOS

The High Income Portfolio pays a monthly fee to Fidelity Management at an
annual fee rate made up of the sum of two components:

1. A group fee rate based on the monthly average net assets of all the
mutual funds advised by Fidelity Management. On an annual basis this
rate cannot rise above 0.37%, and drops as total assets in all these
funds rise.

2. An individual fund fee rate of 0.45% of the High Income Portfolio's
average net assets throughout the month. One-twelfth of the annual
management fee rate is applied to net assets averaged over the most
recent month, resulting in a dollar amount which is the management fee
for that month.

The Equity-Income, Growth, Asset Manager and Overseas Portfolios' fee rates
are each made of two components:

1. A group fee rate based on the monthly average net assets of all of the
mutual funds advised by Fidelity Management. On an annual basis, this
rate cannot rise above 0.52%, and drops as total assets in all these
mutual funds rise.

2. An individual Portfolio fee rate of 0.20% for the Equity-Income
Portfolio, 0.30% for the Growth Portfolio, 0.40% for the Asset Manager
Portfolio and 0.45% for the Overseas Portfolio.

One-twelfth of the sum of these two rates is applied to the respective
Portfolio's net assets averaged over the most recent month, giving a dollar
amount which is the fee for that month.

Thus, the High Income Portfolio may have a fee of as high as 0.82% of its
average net assets. The Equity-Income Portfolio may have a fee of as high as
0.72% of its average net assets. The Growth Portfolio may have a fee of as
high as 0.82% of its average net assets. The Asset Manager Portfolio may
have a fee of as high as 0.92% of its average net assets. The Overseas
Portfolio may have a fee of as high as 0.97% of its average net assets. The
actual fee rate may be less depending on the total assets in the funds
advised by Fidelity Management.

INVESTMENT ADVISORY SERVICES TO T. ROWE PRICE. The Investment Adviser for
the International Stock Portfolio is Rowe Price-Fleming International, Inc.
("Price-Fleming"). Price-Fleming, founded in 1979 as a joint venture between
T. Rowe Price Associates, Inc. and Robert Fleming Holdings, Limited, is one
of America's largest international mutual fund asset managers with
approximately $20 billion under management in its offices in Baltimore,
London, Tokyo and Hong Kong. To cover investment management and operating
expenses, the International Stock Portfolio pays Price-Fleming a single,
all-inclusive fee of 1.05% of its average daily net assets.

INVESTMENT ADVISORY SERVICES TO DGPF - Each Series of DGPF pays an investment
adviser an annual fee for managing the portfolios and making the investment
decisions for the Series. The investment adviser for the International
Equity Series is Delaware International Advisers Ltd. ("Delaware
International"). The annual fee paid by the International Equity Series to
Delaware International is equal to 0.75% of the average daily net assets of
the Series.

ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS - The Company reserves the
right, subject to applicable law, to make additions to, deletions from, or
substitutions for the shares that are held in the Sub-Accounts or that the
Sub-Accounts may purchase. If the shares of any Underlying Fund are no
longer available for investment or if in the Company's judgment further
investment in any Underlying Fund should become inappropriate in view of the
purposes of the VEL Account or the affected Sub-Account, the Company may
redeem the shares of that Underlying Fund and substitute shares of another
registered open-end management company. The Company will not substitute any
shares attributable to a Policy interest in a Sub-Account without notice to
the Policyowner and prior approval of the Commission and state insurance
authorities, to the extent required by the 1940 Act or other applicable law.
The VEL Account may, to the extent permitted by law, purchase other
securities for other policies or permit a conversion between policies upon
request by a Policyowner.

The Company also reserves the right to establish additional Sub-Accounts of
the VEL Account, each of which would invest in shares corresponding to a new
Underlying Fund or in shares of another investment company having a specified
investment objective. Subject to applicable law and any required Commission
approval, the Company may, in its sole discretion, establish new Sub-Accounts
or eliminate one or more Sub-Accounts if marketing needs, tax considerations
or

<PAGE>

investment conditions warrant. Any new Sub-Accounts may be made available to
existing Policyowners on a basis to be determined by the Company.

Shares of the Funds of the Trust are also issued to separate accounts of the
Company and its affiliates which issue variable annuity contracts ("mixed
funding"). Shares of the Portfolios of VIP and VIP II, the Portfolio of T.
Rowe Price and the Series of DGPF are also issued to other unaffiliated
insurance companies ("shared funding"). It is conceivable that in the
future such mixed funding or shared funding may be disadvantageous for
variable life Policyowners or variable annuity Policyowners. Although the
Company and the Underlying Investment Companies do not currently foresee any
such disadvantages to either variable life insurance Policyowners or variable
annuity Policyowners, the Company and the respective Trustees intend to
monitor events in order to identify any material conflicts between such
Policyowners and to determine what action, if any, should be taken in
response thereto. If the Trustees were to conclude that separate funds
should be established for variable life and variable annuity separate
accounts, the Company will bear the attendant expenses.

If any of these substitutions or changes are made, the Company may by
appropriate endorsement change the Policy to reflect the substitution or
change and will notify Policyowners of all such changes. If the Company
deems it to be in the best interest of Policyowners, and subject to any
approvals that may be required under applicable law, the VEL Account or any
Sub-Account(s) may be operated as a management company under the 1940 Act,
may be deregistered under the 1940 Act if registration is no longer required,
or may be combined with other Sub-Accounts or other separate accounts of the
Company.

VOTING RIGHTS - To the extent required by law, the Company will vote
Underlying Fund shares held by each Sub-Account in accordance with
instructions received from Policyowners with Policy Value in such
Sub-Account. If the 1940 Act or any rules thereunder should be amended or if
the present interpretation of the 1940 Act or such rules should change, and
as a result the Company determines that it is permitted to vote shares in its
own right, whether or not such shares are attributable to the Policies, the
Company reserves the right to do so.

Each person having a voting interest will be provided with proxy materials of
the respective Underlying Fund together with an appropriate form with which
to give voting instructions to the Company. Shares held in each Sub-Account
for which no timely instructions are received will be voted in proportion to
the instructions received from all persons with an interest in such
Sub-Account furnishing instructions to the Company. The Company will also
vote shares held in the VEL Account that it owns and which are not
attributable to Policies in the same proportion.

The number of votes which a Policyowner has the right to instruct will be
determined by the Company as of the record date established for the
Underlying Fund. This number is determined by dividing each Policyowner's
Policy Value in the Sub-Account, if any, by the net asset value of one share
in the corresponding Underlying Fund in which the assets of the Sub-Account
are invested.

The Company may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that the shares be
voted so as (1) to cause a change in the subclassification or investment
objective of one or more of the Underlying Funds or (2) to approve or
disapprove an investment advisory contract for the Underlying Funds. In
addition, the Company may disregard voting instructions in favor of any
change in the investment policies or in any investment adviser or principal
underwriter initiated by Policyowners or the Trustees. The Company's
disapproval of any such change must be reasonable and, in the case of a
change in investment policies or investment adviser, based on a good faith
determination that such change would be contrary to state law or otherwise is
inappropriate in light of the objectives and purposes of the Underlying
Funds. In the event the Company does disregard voting instructions, a summary
of and the reasons for that action will be included in the next periodic
report to Policyowners.

THE POLICY

APPLICATION FOR A POLICY - Upon receipt at its Principal Office of a
completed application from a prospective Policyowner, the Company will follow
certain insurance underwriting procedures designed to determine whether the
proposed Insured is insurable. This process may involve such verification
procedures as medical examinations and may require that further information
be provided by the proposed Policyowner before a determination of
insurability can be made. A Policy cannot be issued until this underwriting
procedure has been completed. The Company reserves the right to reject an
application which does not meet the Company's underwriting guidelines, but in
underwriting insurance, the Company shall comply with all applicable federal
and state prohibitions concerning unfair discrimination.

If at the time of application a prospective Policyowner makes a payment equal
to at least one Monthly Deduction for the Policy as applied for, pending
underwriting approval, the Company will provide fixed conditional insurance
pursuant to a Conditional Insurance Agreement in the amount of insurance
applied for, up to a maximum of $500,000. This coverage will generally
continue for a maximum of 90 days from the date of the application or the
completion of a medical exam, should one be required. In no event will any
insurance proceeds be paid under the Conditional Insurance Agreement if death
is by suicide.

<PAGE>

If the application is approved, the Policy will be issued as of the date the
terms of the Conditional Insurance Agreement were met. If no Conditional
Insurance Agreement is in effect because the prospective Policyowner does not
wish to make any payment until the Policy is issued or has paid an initial
premium that is not sufficient to place the Policy in force, upon delivery of
the Policy the Company will require payment of sufficient premium to place
the insurance in force.

Pending completion of insurance underwriting and Policy issuance procedures,
the initial premium will be held in the Company's General Account. If the
application is approved and the Policy is issued and accepted, the initial
premium held in the General Account will be credited with interest not later
than the date of receipt of the premium at the Company's Principal Office.
IF A POLICY IS NOT ISSUED, THE PREMIUMS WILL BE RETURNED TO YOU WITHOUT
INTEREST.

If your Policy provides for a full refund of the initial payment under its
"Right to Examine Policy" provision as required in your state, all Policy
Value in the General Account that you initially designated to go to the
Sub-Accounts will be transferred to the Sub-Accounts you have chosen not
later than the expiration of the period during which you may exercise the
"Right to Examine Policy" provision. If the "Payor Provision" is in effect,
(see "POLICY TERMINATION AND REINSTATEMENT - Payor Provisions") Payor
premiums which are not "excess premiums" will be transferred to Sub-Account 3
(which invests in the Money Market Fund of the Trust) not later than 3 days
after underwriting approval of the Policy.

If the Policy is issued to the Trustee of an employee benefit plan, the
amounts held in the Company's General Account will be allocated to the
Sub-Accounts according to the Policyowner's instructions, upon return of a
Delivery Receipt to the Principal Office. For all other Policyowners, if the
initial Net Premiums are less than $10,000, the amounts held in the Company's
General Account will be allocated to the Sub-Accounts (according to your
instructions) not later than three days after underwriting approval of the
Policy. If the amount allocated to the VEL Account exceeds $10,000 annually
or if the Policy provides for planned premium payments during the first year
of $5,000 semi-annually, $2,500 quarterly or $1,000 monthly, the entire
amount will remain in the General Account until return of a Delivery Receipt
to the Principal Office. The entire amount will then be allocated to the
Sub-Accounts according to your instructions. Amounts remaining in the
General Account will continue to be credited interest from date of receipt of
the premium at the Principal Office.

FREE LOOK PERIOD - The Policy provides for an initial Free Look Period. You
may cancel the Policy by mailing or delivering the Policy to the Principal
Office or an agent of the Company on or before the latest of (a) 45 days
after the application for the Policy is signed, (b) 10 days after you receive
the Policy, or (c) 10 days after the Company mails or personally delivers a
notice of withdrawal rights to you. When you return the Policy, the Company
will mail within seven days a refund equal to the sum of (1) the difference
between the premiums, including fees and charges paid, and any amounts
allocated to the VEL Account, and (2) the value of the amounts allocated to
the VEL Account, and (3) any fees or charges imposed on the amounts allocated
to the VEL Account. The amount refunded in (1) above includes any premiums
allocated to the General Account. Where required by state law, the refund
will equal the premiums paid. The refund of any premium paid by check,
however, may be delayed until the check has cleared your bank.

After an increase in Face Amount, the Company will mail or personally deliver
a notice of a "Free Look" with respect to the increase. You will have the
right to cancel the increase before the latest of (a) 45 days after the
application for the increase is signed, (b) 10 days after you receive the new
specification pages issued for the increase, or (c) 10 days after the Company
mails or delivers a notice of withdrawal rights to you. Upon cancelling the
increase, you will receive a credit to your Policy Value of charges which
would not have been deducted but for the increase. The amount to be credited
will be refunded if you so request. The Company will also waive any
surrender charge calculated for the increase.

CONVERSION PRIVILEGES - Once during the first 24 months after the Date of
Issue or after the effective date of an increase in Face Amount, while the
Policy is in force, you may convert your Policy without Evidence of
Insurability to a flexible premium adjustable life insurance Policy with
fixed and guaranteed minimum benefits. Assuming that there have been no
increases in the initial Face Amount, you can accomplish this within 24
months after the Date of Issue by transferring, without charge, the Policy
Value in the VEL Account to the General Account and by simultaneously
changing your premium allocation instructions to allocate future premium
payments to the General Account. Within 24 months after the effective date of
each increase, you can transfer, without charge, all or part of the Policy
Value in the VEL Account to the General Account and simultaneously change
your premium allocation instructions to allocate all or part of future
premium payments to the General Account.

Where required by state law, and at your request, the Company will issue a
flexible premium adjustable life insurance policy to you. The new policy
will have the same face amount, issue ages, dates of issue, and risk
classifications as the original Policy.

PREMIUM PAYMENTS - Premium Payments are payable to the Company, and may be
mailed to the Principal Office or paid through an authorized agent of the
Company. All premium payments after the initial premium payment are credited
to the VEL Account or General Account as of date of receipt at the Principal
Office.

<PAGE>

You may establish a schedule of planned premiums which will be billed by the
Company at regular intervals. Failure to pay planned premiums, however, will
not itself cause the Policy to lapse. You may also make unscheduled premium
payments at any time prior to the Final Premium Payment Date or skip planned
premium payments, subject to the maximum and minimum premium limitations
described below. Therefore, unlike conventional insurance policies, a Policy
does not obligate you to pay premiums in accordance with a rigid and
inflexible premium schedule.

You may also elect to pay premiums by means of a monthly automatic payment
("MAP") procedure. Under a MAP procedure, amounts will be deducted each
month, generally on the Monthly Payment Date, from your checking account and
applied as a premium under a Policy. The minimum payment permitted under MAP
is $50.

Premiums are not limited as to frequency and number. However, no premium
payment may be less than $100 without the Company's consent. Moreover,
premium payments must be sufficient to cover the next Monthly Deduction plus
loan interest accrued, or the Policy may lapse. See "POLICY TERMINATION AND
REINSTATEMENT."

In no event may the total of all premiums paid exceed the current maximum
premium limitations set forth in the Policy, which are required by Federal
tax laws. These maximum premium limitations will change whenever there is
any change in the Face Amount, the addition or deletion of a rider, or a
change in the Sum Insured Option. If a premium is paid which would result in
total premiums exceeding the current maximum premium limitations, the Company
will only accept that portion of the premiums which shall make total premiums
equal the maximum. Any part of the premiums in excess of that amount will be
returned and no further premiums will be accepted until allowed by the
current maximum premium limitation prescribed by Internal Revenue Service
rules. However, notwithstanding the current maximum premium limitations, the
Company will accept a premium which is needed in order to prevent a lapse of
the Policy during a policy year. See "POLICY TERMINATION AND REINSTATEMENT."

ALLOCATION OF NET PREMIUMS - The Net Premium equals the premium paid less the
premium tax charge. In the application for a Policy, you indicate the
initial allocation of Net Premiums among the General Account and the
Sub-Accounts of the VEL Account. You may allocate premiums to one or more
Sub-Accounts, but may not have Policy Value in more than seven Sub-Accounts
at any one time. The minimum amount which may be allocated to a Sub-Account
is 1% of Net Premium paid. Allocation percentages must be in whole numbers
(for example, 33 1/3% may not be chosen) and must total 100%.

You may change the allocation of future Net Premiums at any time pursuant to
written or telephone request. If allocation changes by telephone are elected
by the Policyowner, a properly completed authorization form must be on file
before telephone requests will be honored. The policy of the Company and its
agents and affiliates is that they will not be responsible for losses
resulting from acting upon telephone requests reasonably believed to be
genuine. The Company will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine; otherwise, the Company
may be liable for any losses due to unauthorized or fraudulent instructions.
The procedures the Company follows for transactions initiated by telephone
include requirements that callers on behalf of a Policyowner identify
themselves by name and identify the Policyowner by name, date of birth and
social security number. All transfer instructions by telephone are tape
recorded. An allocation change will be effective as of the date of receipt
of the notice at the Principal Office. No charge is currently imposed for
changing premium allocation instructions. The Company reserves the right to
impose such a charge in the future, but guarantees that the charge will not
exceed $25.

The Policy Value in the Sub-Accounts will vary with their investment
experience; you bear this investment risk. The investment performance may
affect the Death Proceeds as well. Policyowners should periodically review
their allocations of premiums and Policy Value in light of market conditions
and overall financial planning requirements.

TRANSFER PRIVILEGE - Subject to the Company's then current rules, you may at
any time transfer the Policy Value among the Sub-Accounts or between a
Sub-Account and the General Account. However, the Policy Value held in the
General Account to secure a Policy loan may not be transferred.

All requests for transfers must be made to the Principal Office. The amount
transferred will be based on the Policy Value in the Account(s) next computed
after receipt of the transfer order. The Company will make transfers
pursuant to written or telephone requests. As discussed in "THE POLICY -
Allocation of Net Premiums," a properly completed authorization form must be
on file at the Principal Office before telephone requests will by honored.

Transfers involving the General Account are currently permitted only if:

(a) There has been at least a ninety (90) day period since the
last transfer from the General Account; and

(b) The amount transferred from the General Account in each
transfer does not exceed the lesser of $100,000 or 25%
of the Accumulated Value under the Policy.

These rules are subject to change by the Company.

<PAGE>

You may have automatic transfers of at least $100 each made on a periodic
basis (a) from Sub-Account 3 or Sub-Account 5 (which invests in the Money
Market Fund and Government Bond Fund of the Trust, respectively) to one or
more of the other Sub-Accounts or (b) to automatically reallocate Policy
value among the Sub-Accounts. Automatic transfers may be made on a monthly,
bimonthly, quarterly, semiannual or annual schedule. Generally, all transfers
will be processed on the 15th of each scheduled month. However, if the 15th
is not a business day or is the Monthly Payment Date, the automatic transfer
will be processed on the next business day.

The transfer privilege is subject to the consent of the Company. The Company
reserves the right to impose limitations on transfers including, but not
limited to: (1) the minimum amount that may be transferred, (2) the minimum
amount that may remain in a Sub-Account following a transfer from that
Sub-Account, (3) the minimum period of time between transfers involving the
General Account, and (4) the maximum amount that may be transferred each time
from the General Account. The first six transfers in a Policy year will be
free of any charge. Thereafter, a $10 transfer charge will be deducted from
the amount transferred for each transfer in that Policy year. The Company
may increase or decrease this charge, but it is guaranteed never to exceed
$25. The first automatic transfer counts as one transfer towards the six
free transfers allowed in each Policy year; each subsequent automatic
transfer is without charge and does not reduce the remaining number of
transfers which may be made free of charge. Any transfers made with respect
to a conversion privilege, Policy loan or material change in investment
policy will not count towards the six free transfers.

DEATH PROCEEDS - As long as the Policy remains in force (see "POLICY
TERMINATION AND REINSTATEMENT"), the Company will, upon due proof of the
Insured's death, pay the Death Proceeds of the Policy to the named
Beneficiary. The Company will normally pay the Death Proceeds within seven
days of receiving due proof of the Insured's death, but the Company may delay
payments under certain circumstances. See "OTHER POLICY PROVISIONS -
Postponement Of Payments. " The Death Proceeds may be received by the
Beneficiary in cash or under one or more of the payment options set forth in
the Policy. See "APPENDIX B - PAYMENT OPTIONS. "

Prior to the Final Premium Payment Date, the Death Proceeds are: (a) The Sum
Insured provided under Option 1 or Option 2, whichever is elected and in
effect on the date of death; plus (b) any additional insurance on the
Insured's life that is provided by rider; minus (c) any outstanding Debt, any
partial withdrawals and partial withdrawal charges, and any Monthly
Deductions due and unpaid through the Policy month in which the Insured dies.
After the Final Premium Payment Date, the Death Proceeds equal the surrender
Value of the Policy. The amount of Death Proceeds payable will be determined
as of the date of the Insured's death.

SUM INSURED OPTIONS - The Policy provides two Sum Insured Options: Option 1
and Option 2, as described below. You designate the desired Sum Insured
Option in the application. You may change the option once per Policy year by
written request. There is no charge for a change in option.

Under Option 1, the Sum Insured is equal to the greater of the Face Amount of
insurance or the Guideline Minimum Sum Insured.

Under Option 2, the Sum Insured is equal to the greater of the Face Amount of
insurance plus the Policy Value or the Guideline Minimum Sum Insured.

GUIDELINE MINIMUM SUM INSURED - The Guideline Minimum Sum Insured is equal to
a percentage of the Policy Value as set forth below. The Guideline Minimum
Sum Insured is determined in accordance with Internal Revenue Code
regulations to ensure that the Policy qualifies as a life insurance contract
and that the insurance proceeds will be excluded from the gross income of the
Beneficiary.

GUIDELINE MINIMUM SUM INSURED TABLE

Age of Insured on Percentage of
Date of Death Policy Value

40 and under . . . . . . . . . . . . 250%
45 . . . . . . . . . . . . . . . . . 215%
50 . . . . . . . . . . . . . . . . . 185%
55 . . . . . . . . . . . . . . . . . 150%
60 . . . . . . . . . . . . . . . . . 130%
65 . . . . . . . . . . . . . . . . . 120%
70 . . . . . . . . . . . . . . . . . 115%
75 . . . . . . . . . . . . . . . . . 105%
80 . . . . . . . . . . . . . . . . . 105%
85 . . . . . . . . . . . . . . . . . 105%
90 . . . . . . . . . . . . . . . . . 105%
95 and above . . . . . . . . . . . . 100%

<PAGE>

For the Ages not listed, the progression between the listed Ages is linear.

Under both Option 1 and Option 2 the Sum Insured provides insurance
protection. Under Option 1, the Sum Insured remains level unless the
applicable percentage of Policy Value under the Guideline Minimum Sum Insured
exceeds the Face Amount, in which case the Sum Insured will vary as the
Policy Value varies. Under Option 2, the Sum Insured varies as the Policy
Value changes.

For any Face Amount, the amount of the Sum Insured and thus the Death
Proceeds will be greater under Option 2 than under Option 1, since the Policy
Value is added to the specified Face Amount and included in the Death
Proceeds only under Option 2. However, the cost of insurance included in the
Monthly Deduction will be greater, and thus the rate at which Policy Value
will accumulate will be slower, under Option 2 than under Option 1, (assuming
the same specified Face Amount and the same actual premiums paid). See
"CHARGES AND DEDUCTIONS - Monthly Deduction From Policy Value."

If you desire to have premium payments and investment performance reflected
in the amount of the Sum Insured, you should choose Option 2. If you desire
premium payments and investment performance reflected to the maximum extent
in the Policy Value, you should select Option 1.

ILLUSTRATION OF OPTION 1 - For purposes of this illustration, assume that the
Insured is under the Age of 40, and that there is no outstanding Debt.

Under Option 1, a Policy with a $50,000 Face Amount will generally have a Sum
Insured equal to $50,000. However, because the Sum Insured must be equal to
or greater than 250% of Policy Value, if at any time the Policy Value exceeds
$20,000, the Sum Insured will exceed the $50,000 Face Amount. In this
example, each additional dollar of Policy Value above $20,000 will increase
the Sum Insured by $2.50. For example, a Policy with a Policy Value of
$35,000 will have a Guideline Minimum Sum Insured of $87,500 ($35,000 x
2.50); Policy Value of $40,000 will produce a Guideline Minimum Sum Insured
of $100,000 ($40,000 x 2.50); and Policy Value of $50,000 will produce a
Guideline Minimum Sum Insured of $125,000 ($50,000 x 2.50).

Similarly, so long as Policy Value exceeds $20,000, each dollar taken out of
Policy Value will reduce the Sum Insured by $2.50. If, for example, the
Policy Value is reduced from $25,000 to $20,000 because of partial
withdrawals, charges or negative investment performance, the Sum Insured will
be reduced from $62,500 to $50,000. If at any time, however, the Policy
Value multiplied by the applicable percentage is less than the Face Amount,
the Sum Insured will equal the Face Amount of the Policy.

The applicable percentage becomes lower as the Insured's Age increases. If
the Insured's Age in the above example were, for example, 50 (rather than
between 0 and 40), the applicable percentage would be 185%. The Sum Insured
would not exceed the $50,000 Face Amount unless the Policy Value exceeded
$27,027 (rather than $20,000), and each dollar then added to or taken from
Policy Value would change the Sum Insured by $1.85.

ILLUSTRATION OF OPTION 2 - For purposes of this illustration, assume that the
Insured is under the Age of 40 and that there is no outstanding Debt.

Under Option 2, a Policy with a Face Amount of $50,000 will generally produce
a Sum Insured of $50,000 plus Policy Value. For example, a Policy with
Policy Value of $5,000 will produce a Sum Insured of $55,000 ($50,000 +
$5,000); Policy Value of $10,000 will produce a Sum Insured of $60,000
($50,000 + $10,000); Policy Value of $25,000 will produce a Sum Insured of
$75,000 ($50,000 + $25,000). However, the Sum Insured must be at least 250%
of the Policy Value. Therefore, if the Policy Value is greater than $33,333,
250% of that amount will be the Sum Insured, which will be greater than the
Face Amount plus Policy Value. In this example, each additional dollar of
Policy Value above $33,333 will increase the Sum Insured by $2.50. For
example, if the Policy Value is $35,000, the Guideline Minimum Sum Insured
will be $87,500 ($35,000 x 2.50); Policy Value of $40,000 will produce a
Guideline Minimum Sum Insured of $100,000 ($40,000 x 2.50); and Policy Value
of $50,000 will produce a Guideline Minimum Sum Insured of $125,000 ($50,000
x 2.50).

Similarly, if Policy Value exceeds $33,333, each dollar taken out of Policy
Value will reduce the Sum Insured by $2.50. If, for example, the Policy
Value is reduced from $45,000 to $40,000 because of partial withdrawals,
charges or negative investment performance, the Sum Insured will be reduced
from $112,500 to $100,000. If at any time, however, Policy Value multiplied
by the applicable percentage is less than the Face Amount plus Policy Value,
then the Sum Insured will be the current Face Amount plus Policy Value.

The applicable percentage becomes lower as the Insured's Age increases. If
the Insured's Age in the above example were 50, the Sum Insured must be at
least 1.85 times the Policy Value. The amount of the Sum Insured would be
the sum of the Policy Value plus $50,000 unless the Policy Value exceeded
$58,824 (rather than $33,333). Each dollar added to or

<PAGE>

subtracted from the Policy would change the Sum Insured by $1.85.

The Sum Insured under Option 2 will always be the greater of the Face Amount
plus Policy Value or the Policy Value multiplied by the applicable percentage.

CHANGE IN SUM INSURED OPTION - Generally, the Sum Insured Option in effect
may be changed once each Policy year by sending a written request for change
to the Principal Office. Changing Sum Insured Options will not require
Evidence of Insurability. The effective date of any such change will be the
Monthly Payment Date on or following the date of receipt of the request. No
charges will be imposed on changes in Sum Insured Options.

If the Sum Insured Option is changed from Option 2 to Option 1, the Face
Amount will be increased to equal the Sum Insured which would have been
payable under Option 2 on the effective date of the change (i.e. the Face
Amount immediately prior to the change plus the Policy Value on the date of
the change). The amount of the Sum Insured will not be altered at the time
of the change. However, the change in option will affect the determination of
the Sum Insured from that point on, since the Policy Value will no longer be
added to the Face Amount in determining the Sum Insured; the Sum Insured will
equal the new Face Amount (or, if higher, the Guideline Minimum Sum Insured).
The cost of insurance may be higher or lower than it otherwise would have
been since any increases or decreases in Policy Value will, respectively,
reduce or increase the Insurance Amount at Risk under Option 1. Assuming a
positive net investment return with respect to any amounts in the VEL
Account, changing the Sum Insured Option from Option 2 to Option 1 will
reduce the Insurance Amount at Risk and therefore the cost of insurance
charge for all subsequent Monthly Deductions, compared to what such charge
would have been if no such change were made.

If the Sum Insured Option is changed from Option 1 to Option 2, the Face
Amount will be decreased to equal the Sum Insured less the Policy Value on
the effective date of the change. This change may not be made if it would
result in a Face Amount less than $40,000. A change from Option 1 to Option
2 will not alter the amount of the Sum Insured at the time of the change, but
will affect the determination of the Sum Insured from that point on. Because
the Policy Value will be added to the new specified Face Amount, the Sum
Insured will vary with the Policy Value. Thus, under Option 2, the Insurance
Amount at Risk will always equal the Face Amount unless the Guideline Minimum
Sum Insured is in effect. The cost of insurance may also be higher or lower
than it otherwise would have been without the change in Sum Insured Option.
See "CHARGES AND DEDUCTIONS - Monthly Deduction From Policy Value."

A change in Sum Insured Option may result in total premiums paid exceeding
the then current maximum premium limitation determined by Internal Revenue
Service Rules. In such event, the Company will pay the excess to the
Policyowner. See "THE POLICY - Premium Payments."

CHANGE IN FACE AMOUNT - Subject to certain limitations, you may increase or
decrease the specified Face Amount of a Policy at any time by submitting a
written request to the Company. Any increase or decrease in the specified
Face Amount requested by you will become effective on the Monthly Payment
Date on or next following the date of receipt of the request at the Principal
Office, or, if Evidence of Insurability is required, the date of approval of
the request.

INCREASES - Along with the written request for an increase, you must submit
satisfactory Evidence of Insurability. The consent of the Insured is also
required whenever the Face Amount is increased. A request for an increase in
Face Amount may not be less than $10,000. You may not increase the Face
Amount after the Insured reaches Age 80. An increase must be accompanied by
an additional premium if the Policy Value is less than $50 plus an amount
equal to the sum of two Monthly Deductions. On the effective date of each
increase in Face Amount, a transaction charge of $50 will be deducted from
Policy Value for administrative costs. The effective date of the increase
will be the first Monthly Payment Date on or following the date all of the
conditions for the increase are met.

An increase in the Face Amount will generally affect the Insurance Amount at
Risk and may affect the portion of the Insurance Amount at Risk included in
various Premium Classes (if more than one Premium Class applies), both of
which may affect the monthly cost of insurance charges. A surrender charge
will also be calculated for the increase. See "CHARGES AND DEDUCTIONS -
Monthly Deduction From Policy Value, - Surrender Charge. "

After increasing the Face Amount, you will have the right (1) during a Free
Look Period, to have the increase cancelled and the charges which would not
have been deducted but for the increase will be credited to the Policy and
(2) during the first 24 months following the increase, to transfer any or all
Policy Value to the General Account free of charge. See "THE POLICY - Free
Look Period, - Conversion Privileges. " A refund of charges which would not
have been deducted but for the increase will be made at your request.

DECREASES - The minimum amount for a decrease in Face Amount is $10,000. By
current Company practice, the Face Amount in force after any decrease may not
be less than $10,000. (The Company reserves the right to raise the minimum
Face Amount required after a decrease to up to $50,000. Any increase in the
minimum Face Amount will be prospective only.) If, following a decrease in
Face Amount, the Policy would not comply with the maximum premium limitation
applicable under the Internal Revenue Service Rules, the decrease may be
limited or Policy Value may be returned to the

<PAGE>

Policyowner (at your election) to the extent necessary to meet the
requirements. A return of Policy Value may result in tax liability to you.

A decrease in the Face Amount will affect the total Insurance Amount at Risk
and the portion of the Insurance Amount at Risk covered by various Premium
Classes, both of which may affect a Policyowner's monthly cost of insurance
charges. See "CHARGES AND DEDUCTIONS - Monthly Deduction From Policy Value."

For purposes of determining the cost of insurance charge, any decrease in the
Face Amount will reduce the Face Amount in the following order: (a) the Face
Amount provided by the most recent increase; (b) the next most recent
increases successively; and (c) the initial Face Amount. This order will
also be used to determine whether a surrender charge will be deducted and in
what amount. If the Face Amount is decreased while the "Payor Provisions"
apply (see "POLICY TERMINATION AND REINSTATEMENT - Termination"), the above
order may be modified to determine the cost of insurance charge. In such
case, you may reduce or eliminate any Face Amount for which you are paying
the insurance charges on a last-in, first-out basis before you reduce or
eliminate amounts of insurance which are paid by the Payor.

If you request a decrease in the Face Amount, the amount of any surrender
charge deducted will reduce the current Policy Value. You may specify one
Sub-Account from which the surrender charge will be deducted. If no
specification is provided, the Company will make a Pro Rata Allocation. The
current surrender charge will be reduced by the amount deducted. See
"CHARGES AND DEDUCTIONS - Surrender Charge. "

POLICY VALUE AND SURRENDER VALUE - The Policy Value is the total amount
available for investment and is equal to the sum of the accumulation in the
General Account and the value of the Accumulation Units in the Sub-Accounts.
The Policy Value is used in determining the Surrender Value (the Policy Value
less any Debt and any surrender charge). See "THE POLICY - Surrender. "
There is no guaranteed minimum Policy Value. Because Policy Value on any
date depends upon a number of variables, it cannot be predetermined.

Policy Value and Surrender Value will reflect frequency and amount of Net
Premiums paid, interest credited to accumulations in the General Account, the
investment performance of the chosen Sub-Accounts, any partial withdrawals,
any loans, any loan repayments, any loan interest paid or credited, and any
charges assessed in connection with the Policy.

CALCULATION OF POLICY VALUE - The Policy Value is determined first on the
Date of Issue and thereafter on each Valuation Date. On the Date of Issue,
the Policy Value will be the Net Premiums received, plus any interest earned
during the period when premiums are held in the General Account (before being
transferred to the VEL Account; see THE POLICY - Application For A Policy")
less any Monthly Deductions due. On each Valuation Date after the Date of
Issue the Policy Value will be:

(1) the aggregate of the values in each of the Sub-Accounts on the Valuation
Date, determined for each Sub-Account by multiplying the value of an
Accumulation Unit in that Sub-Account on that date by the number of such
Accumulations Units allocated to the Policy; plus

(2) the value in the General Account (including any amounts
transferred to the General Account with respect to a loan).

Thus, the Policy Value is determined by multiplying the number of
Accumulation Units in each Sub-Account by the value of the applicable
Accumulation Units on the particular Valuation Date, adding the products, and
adding the amount of the accumulations in the General Account, if any.

THE ACCUMULATION UNIT - Each Net Premium is allocated to the Sub-Account(s)
selected by you. Allocations to the Sub-Accounts are credited to the Policy
in the form of Accumulation Units. Accumulation Units are credited
separately for each Sub-Account.

The number of Accumulation Units of each Sub-Account credited to the Policy
is equal to the portion of the Net Premium allocated to the Sub-Account,
divided by the dollar value of the applicable Accumulation Unit as of the
Valuation Date the payment is received at the Company's Principal Office.
The number of Accumulation Units will remain fixed unless changed by a
subsequent split of Accumulation Unit value, transfer, partial withdrawal or
surrender. In addition, if the Company is deducting the Monthly Deduction or
other charges from a Sub-Account, each such deduction will result in
cancellation of a number of Accumulation Units equal in value to the amount
deducted.

The dollar value of an Accumulation Unit of each Sub-Account varies from
Valuation Date to Valuation Date based on the investment experience of that
Sub-Account. That experience, in turn, will reflect the investment
performance, expenses and charges of the respective Underlying Fund. The
value of an Accumulation Unit was set at $1.00 on the first Valuation Date
for each Sub-Account. The dollar value of an Accumulation Unit on a given
Valuation Date is determined by multiplying the dollar value of the
corresponding Accumulation Unit as of the immediately preceding Valuation
Date by

<PAGE>

the appropriate net investment factor.

NET INVESTMENT FACTOR - The net investment factor measures the investment
performance of a Sub-Account of the VEL Account during the Valuation Period
just ended. The net investment factor for each Sub-Account is equal to
1.0000 plus the number arrived at by dividing (a) by (b) and subtracting (c)
from the result, where

(a) is the investment income of that Sub-Account for the Valuation
Period, plus capital gains, realized or unrealized, credited
during the Valuation Period; minus capital losses, realized or
unrealized, charged during the Valuation Period; adjusted for
provisions made for taxes, if any;

(b) is the value of that Sub-Account's assets at the beginning of
the Valuation Period; and

(c) is a charge for each day in the Valuation Period equal to 0.65%
on an annual basis of the daily net asset value of that
Sub-Account for mortality and expense risks. This charge may
be increased or decreased by the Company, but may not exceed
1.275%.

The net investment factor may be greater or less than one. Therefore, the
value of an Accumulation Unit may increase or decrease. You bear the
investment risk.

Allocations to the General Account are not converted into Accumulation Units,
but are credited interest at a rate periodically set by the Company. See
"MORE INFORMATION ABOUT THE GENERAL ACCOUNT. "

PAYMENT OPTIONS - During the Insured's lifetime, you may arrange for the
Death Proceeds to be paid in a single sum or under one or more of the
available payment options. The payment options currently available are
described in Appendix B, "PAYMENT OPTIONS. " These choices are also
available at the Final Premium Payment Date and if the Policy is surrendered.
The Company may make more payment options available in the future. If no
election is made, the Company will pay the Death Proceeds in a single sum.
When the Death Proceeds are payable in a single sum, the Beneficiary may,
within one year of the Insured's death, select one or more of the payment
options, if no payments have yet been made.

OPTIONAL INSURANCE BENEFITS - Subject to certain requirements, one or more of
the optional insurance benefits described in "APPENDIX A - OPTIONAL BENEFITS"
may be added to a Policy by rider. The cost of any optional insurance
benefits will be deducted as part of the Monthly Deduction. See "CHARGES AND
DEDUCTIONS - Monthly Deduction From Policy Value. "

SURRENDER - You may at any time surrender the Policy and receive its
Surrender Value. The Surrender Value is the Policy Value, less Debt and
applicable surrender charges. The Surrender Value will be calculated as of
the Valuation Date on which a written request for surrender and the Policy
are received at the Principal Office. A surrender charge will be deducted
when a Policy is surrendered if less than ten full Policy years have elapsed
from the Date of Issue of the Policy or from the effective date of any
increase in Face Amount. See "CHARGES AND DEDUCTIONS - Surrender Charge. "

The proceeds on surrender may be paid in a single lump sum or under one of
the payment options described in "APPENDIX B - PAYMENT OPTIONS." The Company
will normally pay the Surrender Value within seven days following the
Company's receipt of the surrender request, but the Company may delay payment
under the circumstances described in "OTHER POLICY PROVISIONS - Postponement
Of Payments."

For important tax consequences which may result from surrender see "FEDERAL
TAX CONSIDERATIONS."

PARTIAL WITHDRAWAL - Any time after the first Policy year, you may withdraw a
portion of the Surrender Value of your Policy, subject to the limits stated
below, upon written request filed at the Principal Office. The written
request must indicate the dollar amount you wish to receive and the Accounts
from which such amount is to be withdrawn. You may allocate the amount
withdrawn among the Sub-Accounts and the General Account. If you do not
provide allocation instructions the Company will make a Pro Rata Allocation.
Each partial withdrawal must be in a minimum amount of $500. Under Option 1,
the Face Amount is reduced by the amount of the partial withdrawal, and a
partial withdrawal will not be allowed if it would reduce the Face Amount
below $40,000.

A partial withdrawal from a Sub-Account will result in the cancellation of
the number of Accumulation Units equivalent in value to the amount withdrawn.
The amount withdrawn equals the amount requested by you plus the transaction
charge and any applicable partial withdrawal charge as described under
"CHARGES AND DEDUCTIONS - Charges On Partial Withdrawal. " The Company will
normally pay the amount of the partial withdrawal within seven days following
the Company's receipt of the partial withdrawal request, but the Company may
delay payment under certain circumstances described in "OTHER POLICY
PROVISIONS -Postponement Of Payments. "

For important tax consequences which may result from partial withdrawals, see
"FEDERAL TAX CONSIDERATIONS."

<PAGE>
CHARGES AND DEDUCTIONS

Charges will be deducted in connection with the Policy to compensate the
Company for providing the insurance benefits set forth in the Policy and any
additional benefits added by rider, administering the Policy, incurring
distribution expenses, and assuming certain risks in connection with the
Policies. Each of the charges identified as an administrative charge is
intended to reimburse the Company for actual administrative costs incurred,
and is not intended to result in a profit to the Company.

No premium tax charge, surrender charge or 5% partial withdrawal charge,
described below, will be imposed, and no commissions are paid, on Policies
where the Policyowner as of the date of application is within the following
class of individuals:

All employees of First Allmerica and its affiliates and subsidiaries
located at First Allmerica's home office (or at off-site locations if such
employees are on First Allmerica's home office payroll); all directors of
First Allmerica and its affiliates and subsidiaries; all retired employees
of First Allmerica and its affiliates and subsidiaries eligible under
First Allmerica Companies' Pension Plan or any successor plan; all General
Agents, agents and field staff of First Allmerica; and all spouses,
children, siblings, parents and grandparents of any individuals identified
above, who reside in the same household.

All other charges and deductions under the heading, "CHARGES AND DEDUCTIONS,"
will be imposed under Policies owned by the above class of individuals.

STATE PREMIUM TAX - A charge for state and local premium taxes (if any) is
deducted from each premium payment. State premium taxes generally range from
0.75% to 5%, while local premium taxes (if any) vary by jurisdiction within a
state. The premium tax charge will change when either the applicable
jurisdiction changes or the tax rate within the applicable jurisdiction
changes. The Company should be notified of any change in address of the
Insured as soon as possible.

MONTHLY DEDUCTION FROM POLICY VALUE - Prior to the Final Premium Payment
Date, a Monthly Deduction from Policy Value will be made to cover a charge
for the cost of insurance, a charge for any optional insurance benefits added
by rider and a monthly administrative charge. The cost of insurance charge
and the monthly administrative charges are discussed below. The Monthly
Deduction on or following the effective date of a requested increase in the
Face Amount will also include a $50 administrative charge for the increase.
See "THE POLICY -Change In Face Amount. "

Prior to the Final Premium Payment Date, the Monthly Deduction will be
deducted as of each Monthly Payment Date commencing with the Date of Issue of
the Policy. It will be allocated to one Sub-Account according to your
instructions, or, if no allocation is specified, the Company will make a Pro
Rata Allocation. If the Sub-Account you specify does not have sufficient
funds to cover the Monthly Deduction, the Company will deduct the charge for
that month as if no specification were made. However, if on subsequent
Monthly Payment Dates there is sufficient Policy Value in the Sub-Account you
specified, the Monthly Deduction will be deducted from that Sub-Account. No
Monthly Deductions will be made on or after the Final Premium Payment Date.

COST OF INSURANCE - This charge is designed to compensate the Company for the
anticipated cost of providing Death Proceeds to Beneficiaries of those
Insureds who die prior to the Final Premium Payment Date. The cost of
insurance is determined on a monthly basis, and is determined separately for
the initial Face Amount and for each subsequent increase in Face Amount.
Because the cost of insurance depends upon a number of variables, it can vary
from month to month.

CALCULATION OF THE CHARGE - If you select Sum Insured Option 2, the monthly
cost of insurance charge for the initial Face Amount will equal the
applicable cost of insurance rate multiplied by the initial Face Amount. If
you select Sum Insured Option 1, however, the applicable cost of insurance
rate will be multiplied by the initial Face Amount less the Policy Value
(minus charges for rider benefits) at the beginning of the policy month.
Thus, the cost of insurance charge may be greater for owners who have
selected Sum Insured Option 2 than for those who have selected Sum Insured
Option 1, assuming the same Face Amount in each case and assuming that the
Guideline Minimum Sum Insured is not in effect. In other words, since the Sum
Insured under Option 1 remains constant while the Sum Insured under Option 2
varies with the Policy Value, any Policy Value increases will reduce the
insurance charge under Option 1 but not under Option 2.

If you select Sum Insured Option 2, the monthly insurance charge for each
increase in Face Amount (other than an increase caused by a change in Sum
Insured Option) will be equal to the cost of insurance rate applicable to
that increase multiplied by the increase in Face Amount. If you select Sum
Insured Option 1, the applicable cost of insurance rate will be multiplied by
the increase in the Face Amount reduced by any Policy Value (minus rider
charges) in excess of the initial Face Amount at the beginning of the policy
month.

If the Guideline Minimum Sum Insured is in effect under either Option, a
monthly cost of insurance charge will also be

<PAGE>

calculated for that portion of the Sum Insured which exceeds the current Face
Amount. This charge will be calculated by multiplying the cost of insurance
rate applicable to the initial Face Amount times the Guideline Minimum Sum
Insured (Policy Value times the applicable percentage) less the greater of
the Face Amount or the Policy Value if you selected Sum Insured Option 1, or
less the Face Amount plus the Policy Value if you selected Sum Insured Option
2. When the Guideline Minimum Sum Insured is in effect, the cost of
insurance charge for the initial Face Amount and for any increases will be
calculated as set forth in the preceding two paragraphs.

The monthly cost of insurance charge will also be adjusted for any decreases
in Face Amount. See "THE POLICY - Change In Face Amount: Decreases. "

COST OF INSURANCE RATES - This Contract is sold to eligible individuals who
are members of a non-qualified employee benefit plan having ten or more
members. Premium billing will be administered through one premium
administrator. A portion of the initial face amount may be issued on a
guaranteed or simplified underwriting basis. The amount of this portion will
be determined for each group, and may vary within the group based on Age.

The determination of the class of risk for the guaranteed or simplified issue
portion will, in part, be based on the type of group; the number of persons
eligible to participate in the plan; expected percentage of eligible persons
participating in the plan; and the amount of guaranteed or simplified
underwriting insurance to be issued. Larger groups, higher participation
rates and occupations with historically favorable mortality rates will
generally result in the individuals within that group being placed in a more
favorable class of risk.

Cost of insurance rates are based on a blended unisex rate table, Age and
Premium Class of the Insured at the Date of Issue, the effective date of an
increase or date of rider, as applicable, the amount of premiums paid less
any debt, any partial withdrawals and withdrawal charges, and risk
classification. For those Policies issued in certain states or in certain
cases on a unisex basis, sex-distinct rates do not apply. The cost of
insurance rates are determined at the beginning of each Policy year for the
initial Face Amount. The cost of insurance rates for an increase in Face
Amount or rider are determined annually on the anniversary of the effective
date of each increase or rider. The cost of insurance rates generally
increase as the Insured's Age increases. The actual monthly cost of
insurance rates will be based on the Company's expectations as to future
mortality experience. They will not, however, be greater than the guaranteed
cost of insurance rates set forth in the Policy. These guaranteed rates are
based on the 1980 Commissioners Standard Ordinary Mortality Tables (Mortality
Table B, Smoker or Non-smoker, for unisex Policies) and the Insured's Age.
The Tables used for this purpose set forth different mortality estimates for
smokers and non-smokers. Any change in the cost of insurance rates will
apply to all persons of the same insuring Age and Premium Class whose
Policies have been in force for the same length of time.

The Premium Class of an Insured will affect the cost of insurance rates. The
Company currently places Insureds into preferred Premium Classes, standard
Premium Classes and substandard Premium Classes. In an otherwise identical
Contract, an Insured in the preferred Premium Class will have a lower cost of
insurance than an Insured in a standard Premium Class who, in turn, will have
a lower cost of insurance than an Insured in a substandard Premium Class with
a higher mortality risk. The Premium Classes are also divided into two
categories: smokers and nonsmokers. Nonsmoking Insureds will incur lower
cost of insurance rates than Insureds who are classified as smokers but who
are otherwise in the same Premium Class. Any Insured with an Age at issuance
under 18 will be classified initially as regular or substandard. The Insured
then will be classified as a smoker at Age 18 unless the Insured provides
satisfactory evidence that the Insured is a nonsmoker. The Company will
provide notice to you of the opportunity for the Insured to be classified as
a nonsmoker when the Insured reaches Age 18.

The cost of insurance rate is determined separately for the initial Face
Amount and for the amount of any increase in Face Amount. For each increase
in Face Amount you request, at a time when the Insured is in a less favorable
Premium Class than previously, a correspondingly higher cost of insurance
rate will apply only to that portion of the Insurance Amount at Risk for the
increase. For the initial Face Amount and any prior increases, the Company
will use the Premium Class previously applicable. On the other hand, if the
Insured's Premium Class improves on an increase, the lower cost of insurance
rate generally will apply to the entire Insurance Amount at Risk.

MONTHLY ADMINISTRATIVE CHARGES - Prior to the Final Premium Payment Date a
monthly administrative charge of $5 per month will be deducted from the
Policy Value. This charge will be used to compensate the Company for
expenses incurred in the administration of the Policy and will compensate the
Company for first year underwriting and other start-up expenses incurred in
connection with the Policy. These expenses include the cost of processing
applications, conducting medical examinations, determining insurability and
the Insured's Premium Class, and establishing Policy records. The Company
does not expect to derive a profit from these charges.

CHARGES AGAINST ASSETS OF THE VEL ACCOUNT - The Company currently makes a
charge on an annual basis of 0.65% of the daily net asset value in each
Sub-Account. This charge is for the mortality risk and expense risk which
the Company assumes in relation to the variable portion of the Policies. The
total charges may be increased or decreased by the Board of Directors of the
Company once each year, subject to compliance with applicable state and
federal requirements, but it may not exceed 1.275% on an annual basis.

<PAGE>

Any mortality and expense risk charge above 0.90% is currently considered
above the range of industry practice. To increase the charge above the range
of industry practice, the Company must file a request with the Securities and
Exchange Commission ("SEC") for an exemption from certain SEC rules, in which
it would be necessary to demonstrate that the proposed charge is reasonable
in relation to the risks assumed under the Policy. Even with such a
demonstration, there is no assurance that the SEC would issue an exemption
order.

The mortality risk assumed by the Company is that Insureds may live for a
shorter time than anticipated, and that the Company will therefore pay an
aggregate amount of Death Proceeds greater than anticipated. The expense
risk assumed is that the expenses incurred in issuing and administering the
Policies will exceed the amounts realized from the administrative charges
provided in the Policies. If the charge for mortality and expense risks is
not sufficient to cover actual mortality experience and expenses, the Company
will absorb the losses. If costs are less than the amounts provided, the
difference will be a profit to the Company. To the extent this charge
results in a current profit to the Company, such profit will be available for
use by the Company for, among other things, the payment of distribution,
sales and other expenses. Since mortality and expense risks involve future
contingencies which are not subject to precise determination in advance, it
is not feasible to identify specifically the portion of the charge which is
applicable to each.

In addition, because the Sub-Accounts purchase shares of the Underlying
Investment Companies, the value of the Accumulation Units of the Sub-Accounts
will reflect the investment advisory fee and other expenses incurred by the
Underlying Investment Companies. The prospectuses and statements of
additional information of the Trust, VIP, VIP II, T. Rowe Price and DGPF
contain additional information concerning such fees and expenses.

No charges are currently made against the Sub-Accounts for federal or state
income taxes. Should the Company determine that taxes will be imposed, the
Company may make deductions from the Sub-Account to pay such taxes. See
"FEDERAL TAX CONSIDERATIONS. " The imposition of such taxes would result in
a reduction of the Policy Value in the Sub-Accounts.

SURRENDER CHARGE - The Policy provides for a contingent surrender charge. A
separate contingent surrender charge, described in more detail below, is
calculated upon the issuance of the Policy and for each increase in the Face
Amount. The surrender charge is comprised of a contingent deferred
administrative charge and a contingent deferred sales charge. The contingent
deferred administrative charge compensates the Company for expenses incurred
in administering the Policy. The contingent deferred sales charge
compensates the Company for expenses relating to the distribution of the
Policy, including agents' commissions, advertising and the printing of the
prospectus and sales literature.

A Surrender Charge may be deducted if you request a full surrender of the
Policy or a decrease in Face Amount if less than 10 years have elapsed from
the Date of Issue or from the effective date of any increase in the Face
Amount. The maximum Surrender Charge calculated upon issuance of the Policy
is equal to the sum of (a) plus (b) where (a) is a deferred administrative
charge equal to $8.50 per thousand dollars of the initial Face Amount and (b)
is a deferred sales expense charge equal to 30% of the Guideline Annual
Premium. In accordance with limitations under state insurance regulations,
the amount of the maximum Surrender Charge will not exceed a specified amount
per $1,000 initial face Amount, as indicated in "APPENDIX D - CALCULATION OF
MAXIMUM SURRENDER CHARGES." The maximum Surrender Charge continues in a
level amount for 44 Policy months, reduces by 1% per month for the next 76
policy months, and is zero thereafter. This reduction in the maximum
Surrender Charge will reduce the deferred sales charge and the deferred
administrative charge proportionately.

If you surrender the Policy before making premium payments with respect to
the initial Face Amount which are at least equal to the Guideline Annual
Premium, the actual Surrender Charge imposed may be less than the maximum.
The actual Surrender Charge imposed will be the lesser of either the maximum
Surrender Charge or the sum of $8.50 per thousand dollars of initial Face
Amount plus 30% of premiums paid. Thus, if the amount of the Surrender
Charge is less than the maximum, such amount is comprised of the entire
deferred administrative charge plus 30% of premiums paid. See "APPENDIX D -
CALCULATION OF MAXIMUM SURRENDER CHARGES. "

A separate Surrender Charge will apply to and is calculated for each increase
in Face Amount. The surrender charge for the increase is in addition to that
for the initial Face Amount. The maximum Surrender Charge for the increase
is equal to the sum of (a) plus (b), where (a) is equal to $8.50 per thousand
dollars of increase, and (b) is equal to 30% of the Guideline Annual Premium
for the increase. In accordance with limitations under state insurance
regulations, the amount of the Surrender Charge will not exceed a specified
amount per $1,000 of increase, as indicated in "APPENDIX D - CALCULATION OF
MAXIMUM SURRENDER CHARGES. " As is true for the initial Face Amount, (a) is
a deferred administrative charge and (b) is a deferred sales charge. The
actual Surrender Charge with respect to the increase may be less than the
maximum. The actual Surrender Charge is the lesser of either the maximum
Surrender Charge or the sum of (a) $8.50 per thousand dollars of increase in
Face Amount plus (b) 30% of the Policy Value on the date of increase
associated with the increase in Face Amount, plus (c) 30% of premiums paid
which are associated with the increase in Face Amount.

Additional premium payments may not be required to fund a requested increase
in Face Amount. Therefore, a special rule, which is based on relative
Guideline Annual Premium payments, applies to allocate a portion of existing
Policy Value to

<PAGE>

the increase and to allocate subsequent premium payments between the initial
Policy and the increase. For example, suppose the Guideline Annual Premium
is equal to $1,500 before an increase and is equal to $2,000 as a result of
the increase. The Policy Value on the effective date of the increase would
be allocated 75% ($1,500/$2,000) to the initial Face Amount and 25% to the
increase. All future premiums would also be allocated 75% to the initial
Face Amount and 25% to the increase. Thus, existing Policy Value associated
with the increase will equal the portion of Policy Value allocated to the
increase on the effective date of the increase, before any deductions are
made. Premiums associated with the increase will equal the portion of the
premium payments actually made on or after the effective date of the increase
which are allocated to the increase.

See "APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES," for examples
illustrating the calculation of the maximum surrender charge for the initial
Face Amount and for any increases, as well as for the surrender charge based
on actual premiums paid or associated with any increases.

A surrender charge may be deducted on a decrease in the Face Amount. In the
event of a decrease, the surrender charge deducted is a fraction of the
charge that would apply to a full surrender of the Policy. The fraction will
be determined by dividing the amount of the decrease by the current Face
Amount and multiplying the result by the surrender charge. If more than one
surrender charge is in effect (i.e., pursuant to one or more increases in the
Face Amount of a Policy), the surrender charge will be applied in the
following order: (1) the most recent increase; (2) the next most recent
increases successively, and (3) the initial Face Amount. Where a decrease
causes a partial reduction in an increase or in the initial Face Amount, a
proportionate share of the surrender charge for that increase or for the
initial Face Amount will be deducted.

CHARGES ON PARTIAL WITHDRAWAL - After the first policy year, partial
withdrawals of Surrender Value may be made. The minimum withdrawal is $500.
Under Option 1, the Face Amount is reduced by the amount of the partial
withdrawal, and a partial withdrawal will not be allowed if it would reduce
the Face Amount below $40,000.

A transaction charge which is the smaller of 2% of the amount withdrawn or
$25 will be assessed on each partial withdrawal to reimburse the Company for
the cost of processing the withdrawal. The Company does not expect to make a
profit on this charge.

A partial withdrawal charge may also be deducted from Policy Value. For each
partial withdrawal you may withdraw an amount equal to 10% of the Policy
Value on the date the written withdrawal request is received by the Company
less the total of any prior withdrawals in that Policy year which were not
subject to the Partial Withdrawal charge, without incurring a partial
withdrawal charge. Any partial withdrawal in excess of this amount ("excess
withdrawal") will be subject to the partial withdrawal charge. The partial
withdrawal charge is equal to 5% of the excess withdrawal up to the amount of
the surrender charge(s) on the date of withdrawal. There will be no partial
withdrawal charge if there is no surrender charge on the date of withdrawal
(i.e. 10 years have passed from the Date of Issue and from the effective date
of any increase in the Face Amount).

This right is not cumulative from Policy year to Policy year. For example,
if only 8% of Policy Value were withdrawn in Policy year two, the amount you
could withdraw in subsequent Policy years would not be increased by the
amount you did not withdraw in the second Policy year.

The Policy's outstanding Surrender Charge will be reduced by the amount of
the partial withdrawal charge deducted, by proportionately reducing the
deferred sales charge component and the deferred administrative charge
component. The partial withdrawal charge deducted will decrease existing
surrender charges in the following order:

- first, the Surrender Charge for the most recent increase in Face Amount;

- second, the Surrender Charge for the next most recent increase
successively;

- last, the surrender charge for the initial Face Amount.

See "APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES" for an example
illustrating the calculation of the charges on partial withdrawal and their
impact on the surrender charge(s).

TRANSFER CHARGES - The first six transfers in a Policy year will be free of
charge. Thereafter, a transfer charge of $10 will be imposed for each
transfer request to reimburse the Company for the administrative costs
incurred in processing the transfer request. The Company reserves the right
to increase the charge, but it will never exceed $25. The Company also
reserves the right to change the number of free transfers allowed in a Policy
Year. See "THE POLICY - Transfer Privilege. "

You may have automatic transfers of at least $100 made on a periodic basis,
every 1, 2 or 3 months (a) from Sub-Account 3 or Sub-Account 5 (which invest
in the Money Market Fund and Government Bond Fund of the Trust, respectively)
to one or more of the other Sub-Accounts or (b) to reallocate Policy Value
among the Sub-Accounts. The first automatic transfer counts as one transfer
towards the six free transfers allowed in each policy year. Each subsequent
automatic transfer is

<PAGE>

without charge and does not reduce the remaining number of transfers which
may be made without charge.

If you utilize the Conversion Privilege, Loan Privilege, or reallocate Policy
Value within 20 days of the Date of Issue of the Policy, any resulting
transfer of Policy Value from the Sub-Accounts to the General Account will be
free of charge, and in addition to the six free transfers in a Policy year.
See "THE POLICY - Conversion Privileges" and "POLICY LOANS. "

CHARGE FOR INCREASE IN FACE AMOUNT - For each increase in Face Amount you
request, a transaction charge of $50 will be deducted from Policy Value to
reimburse the Company for administrative costs associated with the increase.
This charge is guaranteed not to increase and the Company does not expect to
make a profit on this charge.

OTHER ADMINISTRATIVE CHARGES - The Company reserves the right to impose a
charge for the administrative costs incurred for changing the Net Premium
allocation instructions, for changing the allocation of any Monthly
Deductions among the various Sub-Accounts, or for a projection of values. No
such charges are currently imposed and any such charge is guaranteed not to
exceed $25.

POLICY LOANS

Loans may be obtained by request to the Company on the sole security of this
Policy. The total amount which may be borrowed is the Loan Value. In the
first Policy year, the Loan Value is 75% of Policy Value reduced by
applicable surrender charges as well as Monthly Deductions and interest on
Debt to the end of the Policy year. The Loan Value in the second Policy year
and thereafter is 90% of an amount equal to Policy Value reduced by
applicable surrender charges. There is no minimum limit on the amount of the
loan. The loan amount will normally be paid within seven days after the
Company receives the loan request at its Principal Office, but the Company
may delay payments under certain circumstances. See "OTHER POLICY PROVISIONS
- - Postponement Of Payments. "

A Policy loan may be allocated among the General Account and one or more
Sub-Accounts. If you do not make an allocation, the Company will make a Pro
Rata Allocation based on the amounts in the Accounts on the date the Company
receives the loan request. Policy Value in each Sub-Account equal to the
Policy loan allocated to such Sub-Account will be transferred to the General
Account, and the number of Accumulation Units equal to the Policy Value so
transferred will be cancelled. This will reduce the Policy Value in these
Sub-Accounts. These transactions are not treated as transfers for purposes
of the transfer charge.

As long as the Policy is in force, Policy Value in the General Account equal
to the loan amount will be credited with interest at an effective annual
yield of at least 6.00% per year. NO ADDITIONAL INTEREST WILL BE CREDITED TO
SUCH POLICY VALUE.

LOAN INTEREST CHARGED - Interest accrues daily and is payable in arrears at
the annual rate of 8%. Interest is due and payable at the end of each Policy
year or on a pro rata basis for such shorter period as the loan may exist.
Interest not paid when due will be added to the loan amount and bear interest
at the same rate. After the due and unpaid interest is added to loan amount,
if the new loan amount exceeds the Policy Value in the General Account, the
Company will transfer Policy Value equal to that excess loan amount from the
Policy Value in each Sub-Account to the General Account as security for the
excess loan amount. The Company will allocate the amount transferred among
the Sub-Accounts in the same proportion that the Policy Value in each
Sub-Account bears to the total Policy Value in all Sub-Accounts.

REPAYMENT OF DEBT - Loans may be repaid at any time prior to the lapse of the
Policy. Upon repayment of Debt, the portion of the Policy Value that is in
the General Account securing the Debt repaid will be allocated to the various
Accounts and increase the Policy Value in such accounts in accordance with
your instructions. If you do not make a repayment allocation, the Company
will allocate Policy Value in accordance with your most recent premium
allocation instructions; provided, however, that loan repayments allocated to
the VEL Account cannot exceed Policy Value previously transferred from the
VEL Account to secure the Debt.

If Debt exceeds the Policy Value less the surrender charge, the Policy will
terminate. A notice of such pending termination will be mailed to the last
known address of you and any assignee. If you do not make sufficient payment
within 62 days after this notice is mailed, the Policy will terminate with no
value. See "POLICY TERMINATION AND REINSTATEMENT. "

EFFECT OF POLICY LOANS - Although Policy loans may be repaid at any time
prior to the lapse of the Policy, Policy loans will permanently affect the
Policy Value and Surrender Value, and may permanently affect the Death
Proceeds. The effect could be favorable or unfavorable, depending upon
whether the investment performance of the Sub-Account(s) is less than or
greater than the interest credited to the Policy Value in the General Account
attributable to the loan.

Moreover, outstanding Policy loans and the accrued interest will be deducted
from the proceeds payable upon the death of the Insured or surrender.

<PAGE>

POLICY TERMINATION AND REINSTATEMENT

TERMINATION - The failure to make premium payments will not cause the Policy
to lapse unless: (a) the Surrender Value is insufficient to cover the next
Monthly Deduction plus loan interest accrued; or (b) if Debt exceeds the
Policy Value. If one of these situations occurs, the Policy will be in
default. You will then have a grace period of 62 days, measured from the date
of default, to make sufficient payments to prevent termination. On the date
of default, the Company will send a notice to you and to any assignee of
record. The notice will state the amount of premium due and the date on which
it is due.

Failure to make a sufficient payment within the grace period will result in
termination of the Policy. If the Insured dies during the grace period, the
Death Proceeds will still be payable, but any Monthly Deductions due and
unpaid through the policy month in which the Insured dies and any other
overdue charges will be deducted from the Death Proceeds.

PAYOR PROVISIONS - Subject to approval in the state in which your Policy was
issued, if you name a "Payor" in your application supplement, then the
following "Payor Provisions" will apply:

The Payor may designate what portion, if any, of each payment of a premium is
"excess premium" to be allocated to the General Account and Sub-Accounts
according to your allocation instructions then in effect. Except for excess
premium, the Payor's premium will automatically be allocated to Sub-Account 3
(which invests in the Money Market Fund of the Trust), from which the Monthly
Deductions will be made. Payor premiums which are initially held in the
General Account (which are not "excess premiums") will be transferred to
Sub-Account 3 not later than 3 days after underwriting approval of the
Policy. No Policy loans, partial withdrawals or transfers may be made from
the amount in Sub-Account 3 attributable to premiums allocated thereto by
Payor.

If the amount in Sub-Account 3 attributable to premiums allocated thereto by
Payor is insufficient to cover the next Monthly Deduction, the Company will
send to the Payor a notice of the due date and amount of premium which is
due. The premium may be paid during a grace period of 62 days beginning on
the premium due date. If the premium payable is not received by the Company
within 31 days of the end of the grace period, a second notice will be sent
to the Payor. A 31-day grace period notice at this time will also be sent to
you if your Policy Value is insufficient to cover the Monthly Deductions then
due.

If the amount in Sub-Account 3 attributable to premiums allocated thereto by
Payor is insufficient to cover the Monthly Deductions due at the end of the
grace period, the balance of such Monthly Deductions will be withdrawn on a
Pro Rata Allocation from the Policy Value, if any, in the General Account and
the Sub-Accounts.

A lapse occurs if the Policy Value is insufficient, at the grace period, to
pay the Monthly Deductions which are due. The Policy terminates on the date
of lapse. Any death benefit payable during the grace period will be reduced
by any overdue charges.

The above Payor Provisions, if applicable, are in lieu of the grace-period
notice and default provisions applicable when "(a) the Surrender Value is
insufficient to cover the next Monthly Deduction plus loan interest accrued,"
but do not apply to "(b) if Debt exceeds the Policy Value." See the first
paragraph of this section captioned "TERMINATION." You or the Payor may upon
written request discontinue the above Payor Provisions. If the Payor makes
written request to discontinue the Payor Provisions, we will send you a
notice of the discontinuance to your last known address.

REINSTATEMENT - If the Policy has not been surrendered and the Insured is
alive, the terminated Policy may be reinstated anytime within 3 years after
the date of default and before the Final Premium Payment Date. The
reinstatement will be effective on the Monthly Payment Date following the
date you submit the following to the Company: (1) a written application for
reinstatement; (2) Evidence of Insurability showing that the Insured is
insurable according to the Company's underwriting rules; and (3) a premium
that, after the deduction of the premium tax charge, is large enough to cover
the Monthly Deductions for the three-month period beginning on the date of
reinstatement.

SURRENDER CHARGE - The Surrender Charge on the date of reinstatement is the
Surrender Charge which should have been in effect had the Policy remained in
force from the Date of Issue.

POLICY VALUE ON REINSTATEMENT - The Policy Value on the date of reinstatement
is:

- the Net Premium paid to reinstate the Policy increased by interest
from the date the payment was received at the Company's Principal
Office;

- plus an amount equal to the Policy Value less Debt on the date of
default;

- minus the Monthly Deduction due on the date of reinstatement. You may
not reinstate any Debt outstanding on the date of default or
foreclosure.

<PAGE>

OTHER POLICY PROVISIONS

The following Policy provisions may vary in certain states in order to comply
with requirements of the insurance laws, regulations, and insurance
regulatory agencies in those states.

POLICYOWNER - The Policyowner is the Insured unless another Policyowner has
been named in the application for the Policy. The Policyowner is generally
entitled to exercise all rights under a Policy while the Insured is alive,
subject to the consent of any irrevocable Beneficiary (the consent of a
revocable Beneficiary is not required). The consent of the Insured is
required whenever the Face Amount of insurance is increased.

BENEFICIARY - The Beneficiary is the person or persons to whom the insurance
proceeds are payable upon the Insured's death. Unless otherwise stated in
the Policy, the Beneficiary has no rights in the Policy before the death of
the Insured. While the Insured is alive, you may change any Beneficiary
unless you have declared a Beneficiary to be irrevocable. If no Beneficiary
is alive when the Insured dies, the owner (or the owner's estate) will be the
Beneficiary. If more than one Beneficiary is alive when the Insured dies,
they will be paid in equal shares, unless you have chosen otherwise. Where
there is more than one Beneficiary, the interest of a Beneficiary who dies
before the Insured will pass to surviving Beneficiaries proportionally.

INCONTESTABILITY - The Company will not contest the validity of a Policy
after it has been in force during the Insured's lifetime for two years from
the Date of Issue. The Company will not contest the validity of any rider or
any increase in the Face Amount after such rider or increase has been in
force during the Insured's lifetime for two years from its effective date.

SUICIDE - The Death Proceeds will not be paid if the Insured commits suicide,
while sane or insane, within two years from the Date of Issue. Instead, the
Company will pay the Beneficiary an amount equal to all premiums paid for the
Policy, without interest, less any outstanding Debt and less any partial
withdrawals. If the Insured commits suicide, while sane or insane, generally
within two years from the effective date of any increase in the Sum Insured,
the Company's liability with respect to such increase will be limited to a
refund of the cost thereof. The Beneficiary will receive the administrative
charges and insurance charges paid for such increase.

AGE - If the Insured's Age as stated in the application for a Policy is not
correct, benefits under a Policy will be adjusted to reflect the correct Age,
if death occurs prior to the Final Premium Payment Date. The adjusted
benefit will be that which the most recent cost of insurance charge would
have purchased for the correct Age. In no event will the Sum Insured be
reduced to less than the Guideline Minimum Sum Insured.

ASSIGNMENT - The owner may assign a Policy as collateral or make an absolute
assignment of the Policy. All rights under the Policy will be transferred to
the extent of the assignee's interest. The Consent of the assignee may be
required in order to make changes in premium allocations, to make transfers,
or to exercise other rights under the Policy. The Company is not bound by an
assignment or release thereof, unless it is in writing and is recorded at the
Company's Principal Office. When recorded, the assignment will take effect
as of the date the written request was signed. Any rights created by the
assignment will be subject to any payments made or actions taken by the
Company before the assignment is recorded. The Company is not responsible
for determining the validity of any assignment or release.

POSTPONEMENT OF PAYMENTS - Payments of any amount due from the VEL Account
upon surrender, partial withdrawals, or death of the Insured, as well as
payments of a Policy loan and transfers may be postponed whenever: (i) the
New York Stock Exchange is closed other than customary weekend and holiday
closings, or trading on the New York Stock Exchange is restricted as
determined by the SEC or (ii) an emergency exists, as determined by the SEC,
as a result of which disposal of securities is not reasonably practicable or
it is not reasonably practicable to determine the value of the VEL Account's
net assets. Payments under the Policy of any amounts derived from the
premiums paid by check may be delayed until such time as the check has
cleared your bank.

The Company also reserves the right to defer payment of any amount due from
the General Account upon surrender, partial withdrawal, or death of the
Insured, as well as payments of policy loans and transfers from the General
Account, for a period not to exceed six months.

DIRECTORS AND PRINCIPAL OFFICERS OF THE COMPANY

Name and Position Principal Occupation(s) During Past Five Years
- ----------------- ----------------------------------------------

Bruce C. Anderson Director of First Allmerica since 1996; Vice
Director and Vice President President, First Allmerica

Abigail M. Armstrong Secretary of First Allmerica since 1996;
Secretary and Counsel Counsel, First Allmerica

<PAGE>

Mark R. Colborn Vice President and Controller, First Allmerica
Vice President and Controller

Kruno Huitzingh Director of First Allmerica since 1996; Vice
Director, Vice President and President & Chief Information Officer, First
Chief Information Officer Allmerica since 1993; Executive Vice President,
Chicago Board Options Exchange, 1985 to 1993

John F. Kelly Director of First Allmerica since 1996; Senior
Director Vice President, General Counsel and Assistant
Secretary, First Allmerica

John F. O'Brien Director, Chairman of the Board, President and
Director and Chairman of Chief Executive Officer of First Allmerica
the Board

Edward J. Parry, III Vice President and Treasurer, First Allmerica
Vice President and Treasurer since 1993; Assistant Vice President to 1992
to 1993; Manager, Price Waterhouse, 1987 to
1992

Richard M. Reilly Director of First Allmerica since 1996; Vice
Director and Vice President President, First Allmerica; Director and
President, Allmerica Investments, Inc.;
Director and President Allmerica Investment
Management Company, Inc. since 1992, Director
and Executive Vice President, 1990 to 1992.

Larry C. Renfro Director of First Allmerica since 1996; Vice
President, First Allmerica

Theodore J. Rupley Director of First Allmerica since 1996;
Director President, The Hanover Insurance Company since
1992; President, Fountain Powerboats, 1992;
President; Metropolitan Property & Casualty
Company, 1986-1992

Philip J. Soule Director of First Allmerica since 1996; Vice
Director President, First Allmerica

Eric Simonsen Director of First Allmerica since 1996; Vice
Director, Vice President President and Chief Financial Officer, First
and Chief Financial Officer Allmerica

Diane E. Wood Director of First Allmerica since 1996; Vice
Director and Vice President President, First Allmerica

DISTRIBUTION

Allmerica Investments, Inc., an indirect subsidiary of First Allmerica, acts
as the principal underwriter of the Policies pursuant to a Sales and
Administrative Services Agreement with the Company and the VEL Account.
Allmerica Investments, Inc. is registered with the Securities and Exchange
Commission as a broker-dealer and is a member of the National Association of
Securities Dealers. The Policies are sold by agents of the Company who are
registered representatives of Allmerica Investments, Inc..

The Company pays to registered representatives who sell the Policy
commissions based on a commission schedule. After issue of the Policy or an
increase in Face Amount, commissions generally will equal 15 percent of the
first year premiums up to a basic premium amount established by the Company.
Thereafter, commissions will generally equal 4 percent of any additional
premiums. Certain registered representatives, including registered
representatives enrolled in the Company's training program for new agents,
may receive additional first year and renewal commissions and training
reimbursements. General Agents of the Company and certain registered
representatives may also be eligible to receive expense reimbursements based
on the amount of earned commissions. General Agents may also receive
overriding commissions, which will not exceed 2.5 percent of first year or 4
percent of renewal premiums.

The Company intends to recoup the commission and other sales expense through
a combination of the deferred sales charge component of the anticipated
surrender and partial withdrawal charges, and the investment earnings on
amounts allocated to accumulate on a fixed basis in excess of the interest
credited on fixed accumulations by the Company. There is no additional
charge to the Policy Owner or to the Separate Account. Any surrender charge
assessed on a Policy will be retained by the Company except for amounts it
may pay to Allmerica Investments, Inc. for services it performs and expenses
it may incur as principal underwriter and general distributor.

<PAGE>

REPORTS

The Company will maintain the records relating to the VEL Account. You will
be promptly sent statements of significant transactions such as premium
payments (other than payments made pursuant to the MAP procedure), changes in
specified Face Amount, changes in Sum Insured Option, transfers among
Sub-Accounts and the General Account, partial withdrawals, increases in loan
amount by you, loan repayments, lapse, termination for any reason, and
reinstatement. An annual statement will also be sent to you within 30 days
after a Policy Anniversary. The annual statement will summarize all of the
above transactions and deductions of charges during the Policy year. It will
also set forth the status of the Death Proceeds, Policy Value, Surrender
Value, amounts in the Sub-Accounts and General Account, and any Policy
loan(s).

In addition, you will be sent periodic reports containing financial
statements and other information for the VEL Account and the Underlying
Investment Companies as required by the Investment Company Act of 1940.

LEGAL PROCEEDINGS

There are no legal proceedings pending to which the VEL Account is a party,
or to which the assets of the VEL Account are subject. The Company is not
involved in any litigation that is of material importance in relation to its
total assets or that relates to the VEL Account.

FURTHER INFORMATION

A Registration Statement under the Securities Act of 1933 relating to this
offering has been filed with the Securities and Exchange Commission. Certain
portions of the Registration Statement and amendments have been omitted from
this prospectus pursuant to the rules and regulations of the Securities and
Exchange Commission. Statements contained in this prospectus concerning the
Policy and other legal documents are summaries. The complete documents and
omitted information may be obtained from the Securities and Exchange
Commission's principal office in Washington, D.C., upon payment of the
Securities and Exchange Commission's prescribed fees.

INDEPENDENT ACCOUNTANTS

The financial statements of the Company as of December 31, 1995 and 1994 and
for each of the three years in the period ended December 31, 1995 and of the
VEL Account as of December 31, 1995 and for the periods indicated, included
in this Prospectus constituting part of the Registration Statement, have been
so included in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.

The financial statements of the Company included herein should be considered
only as bearing on the ability of the Company to meet its obligations under
the Policies.

FEDERAL TAX CONSIDERATIONS

The effect of federal income taxes on the value of a Policy, on loans,
withdrawals, or surrenders, on death benefit payments, and on the economic
benefit to you or the Beneficiary depends upon a variety of factors. The
following discussion is based upon the Company's understanding of the present
federal income tax laws as they are currently interpreted. From time to time
legislation is proposed which, if passed, could significantly, adversely and
possibly retroactively affect the taxation of the Policies. No
representation is made regarding the likelihood of continuation of current
federal income tax laws or of current interpretations by the Internal Revenue
Service (IRS). Moreover, no attempt has been made to consider any applicable
state or other tax laws.

It should be recognized that the following summary of federal income tax
aspects of amounts received under the Policies is not exhaustive, does not
purport to cover all situations and is not intended as tax advice.
Specifically, the discussion below does not address certain tax provisions
that may be applicable if the Policyowner is a corporation or the Trustee of
an employee benefit plan. A qualified tax adviser should always be consulted
with regard to the application of law to individual circumstances.

THE COMPANY AND THE VEL ACCOUNT - The Company is taxed as a life insurance
company under Subchapter L of the Internal Revenue Code of 1986 (the "Code")
and files a consolidated tax return with its parent and affiliates. The
Company does not expect to incur any income tax upon the earnings or realized
capital gains attributable to the VEL Account. Based on these expectations,
no charge is made for federal income taxes which may be attributable to the
VEL Account.

The Company will review periodically the question of a charge to the VEL
Account for federal income taxes. Such a charge

<PAGE>

may be made in future years for any federal income taxes incurred by the
Company. This might become necessary if the tax treatment of the Company is
ultimately determined to be other than what the Company believes it to be, if
there are changes made in the federal income tax treatment of variable life
insurance at the Company level, or if there is a change in the Company's tax
status. Any such charge would be designed to cover the federal income taxes
attributable to the investment results of the VEL Account.

Under current laws the Company may also incur state and local taxes (in
addition to premium taxes) in several states. At present these taxes are not
significant. If there is a material change in applicable state or local tax
laws, charges may be made for such taxes paid, or reserves for such taxes,
attributable to the VEL Account.

TAXATION OF THE POLICIES - The Company believes that the Policies described
in this prospectus will be considered life insurance contracts under Section
7702 of the Code, which generally provides for the taxation of life insurance
policies and places limitations on the relationship of the Policy Value to
the Insurance Amount at Risk. As a result, the Death Proceeds payable are
excludable from the gross income of the Beneficiary. Moreover, any increase
in Policy Value is not taxable until received by the Policyowner or the
Policyowner's designee. But see "MODIFIED ENDOWMENT CONTRACTS. "

The Code also requires that the investment of each Sub-Account be adequately
diversified in accordance with Treasury regulations in order to be treated as
a life insurance policy for tax purposes. Although the Company does not have
control over the investments of the Underlying Funds, the Company believes
that the Underlying Funds currently meet the Treasury's diversification
requirements, and the Company will monitor continued compliance with these
requirements. In connection with the issuance of previous regulations
relating to diversification requirements, the Treasury Department announced
that such regulations do not provide guidance concerning the extent to which
Policyowners may direct their investments to particular divisions of a
separate account. Regulations in this regard may be issued in the future. It
is possible that if and when regulations are issued, the Policies may need to
be modified to comply with such regulations. For these reasons, the Policies
or the Company's administrative rules may be modified as necessary to prevent
a Policyowner from being considered the owner of the assets of the VEL
Account.

The Company believes that loans received under a Policy will be treated as
indebtedness of the Policyowner for federal tax purposes, and under current
law will not constitute income to the Policyowner so long as the Policy
remains in force. But see "MODIFIED ENDOWMENT CONTRACTS. " Deducting
interest on policy loans is, however, subject to the restrictions of Section
264 of the Code. Consumer interest paid on Policy loans under a Policy owned
by an individual is not tax deductible. In addition, no tax deduction is
allowed for any interest on any loan under one or more life insurance
policies (purchased after June 20, 1986) owned by a taxpayer covering the
life of any individual who is an officer or employee of or is financially
interested in, any business carried on by that taxpayer, to the extent the
aggregate amount of such loans exceeds $50,000.

Depending upon the circumstances, a surrender, partial withdrawal, change in
the Sum Insured Option, change in the Face Amount, lapse with policy loan
outstanding, or assignment of the Policy may have tax consequences. In
particular, under specified conditions, a distribution under the Policy
during the first fifteen years from Date of Issue that reduces future
benefits under the Policy will be taxed to the Policyowner as ordinary income
to the extent of any investment earnings in the Policy. Federal, state and
local income, estate, inheritance, and other tax consequences of ownership or
receipt of Policy proceeds depend on the circumstances of each Insured,
Policyowner, or Beneficiary.

MODIFIED ENDOWMENT CONTRACTS - The Technical and Miscellaneous Revenue Act of
1988 ("Act") adversely affects the tax treatment of distributions under
so-called "modified endowment contracts." Under the Act, any life insurance
policy, including a Policy offered by this prospectus, that fails to satisfy
a "seven-pay" test is considered a modified endowment contract. A Policy
fails to satisfy the seven-pay test if the cumulative premiums paid under the
Policy at any time during the first seven policy years exceed the sum of the
net level premiums that would have been paid, had the Policy provided for
paid-up future benefits after the payment of seven level premiums.

If a Policy is considered a modified endowment contract, all distributions
under the Policy will be taxed on an "income first" basis. Most
distributions received by a Policyowner directly or indirectly (including
loans, withdrawals, partial surrenders, or the assignment or pledge of any
portion of the value of the Policy) will be includible in gross income to the
extent that the cash Surrender Value of the Policy exceeds the Policyowner's
investment in the contract. Any additional amounts will be treated as a
return of capital to the extent of the Policyowner's basis in the Policy.
With certain exceptions, an additional 10% tax will be imposed on the portion
of any distribution that is includible in income. All modified endowment
contracts issued by the same insurance company to the same policyowner during
any 12-month period will be treated as a single modified endowment contract
in determining taxable distributions.

Currently, each Policy is reviewed when premiums are received to determine if
it satisfies the seven-pay test. If the Policy does not satisfy the
seven-pay test, the Company will notify the Policyowner of the option of
requesting a refund of the excess premium. The refund process must be
completed within 60 days after the Policy anniversary, or the Policy will be
permanently classified as a modified endowment contract.

<PAGE>

MORE INFORMATION ABOUT THE GENERAL ACCOUNT

As discussed earlier, you may allocate Net Premiums and transfer Policy Value
to the General Account. Because of exemption and exclusionary provisions in
the securities law, any amount in the General Account is not generally
subject to regulation under the provisions of the Securities Act of 1933 or
the Investment Company Act of 1940. Accordingly, the disclosures in this
Section have not been reviewed by the Securities and Exchange Commission.
Disclosures regarding the fixed portion of the Policy and the General Account
may, however, be subject to certain generally applicable provisions of the
Federal securities laws concerning the accuracy and completeness of
statements made in prospectuses.

GENERAL DESCRIPTION - The General Account of the Company is made up of all of
the general assets of the Company other than those allocated to any separate
account. Allocations to the General Account become part of the assets of the
Company and are used to support insurance and annuity obligations. Subject
to applicable law, the Company has sole discretion over the investment of
assets of the General Account.

A portion or all of Net Premiums may be allocated or transferred to
accumulate at a fixed rate of interest in the General Account. Such net
amounts are guaranteed by the Company as to principal and a minimum rate of
interest. The allocation or transfer of funds to the General Account does
not entitle you to share in the investment experience of the General Account.

GENERAL ACCOUNT VALUE - The Company bears the full investment risk for
amounts allocated to the General Account and guarantees that interest
credited to each Policyowner's Policy Value in the General Account will not
be less than an annual rate of 4% ("Guaranteed Minimum Rate").

The Company may, AT ITS SOLE DISCRETION, credit a higher rate of interest
("excess interest"), although it is not obligated to credit interest in
excess of 4% per year, and might not do so. However, the excess interest
rate, if any, in effect on the date a premium is received at the Principal
Office is guaranteed on that premium for one year, unless the Policy Value
associated with the premium becomes security for a Policy loan. AFTER SUCH
INITIAL ONE YEAR GUARANTEE OF INTEREST ON NET PREMIUM, ANY INTEREST CREDITED
ON THE POLICY VALUE IN THE GENERAL ACCOUNT IN EXCESS OF THE GUARANTEED
MINIMUM RATE PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF THE
COMPANY. THE POLICYOWNER ASSUMES THE RISK THAT INTEREST CREDITED MAY NOT
EXCEED THE GUARANTEED MINIMUM RATE.

Even if excess interest is credited to accumulated value in the General
Account, no excess interest will be credited to that portion of the Policy
Value which is equal to Debt. However, such Policy Value will be credited
interest at an effective annual yield of at least 6%.

The Company guarantees that, on each Monthly Payment Date, the Policy Value
in the General Account will be the amount of the Net Premiums allocated or
Policy Value transferred to the General Account, plus interest at an annual
rate of 4% per year, plus any excess interest which the Company credits, less
the sum of all Policy charges allocable to the General Account and any
amounts deducted from the General Account in connection with loans, partial
withdrawals, surrenders or transfers.

THE POLICY - This prospectus describes a flexible premium variable life
insurance policy and is generally intended to serve as a disclosure document
only for the aspects of the Policy relating to the VEL Account. For complete
details regarding the General Account, see the Policy itself.

TRANSFERS, SURRENDERS, PARTIAL WITHDRAWALS AND POLICY LOANS - If a Policy is
surrendered or if a partial withdrawal is made, a Surrender Charge or partial
withdrawal charge, as applicable, is imposed if such event occurs before the
Policy, or an increase in Face Amount, has been in force for 10 policy years.
In the event of a decrease in Face Amount, the Surrender Charge deducted is a
fraction of the charge that would apply to a full surrender of the Policy.
Partial withdrawals are made on a last-in/first-out basis from Policy Value
allocated to the General Account.

The first six transfers in a policy year are free of charge. Thereafter, a
$10 transfer charge will be deducted for each transfer in that Policy year.
The transfer privilege is subject to the consent of the Company and to the
Company's then current rules.

Policy loans may also be made from the Policy Value in the General Account.

Transfers, surrenders, partial withdrawals, Death Proceeds and Policy loans
payable from the General Account may be delayed up to six months. However,
if payment is delayed for 30 days (10 days in New York) or more, the Company
will pay interest at least equal to an effective annual yield of 3 1/2% per
year for the period of deferment. Amounts from the General Account used to
pay premiums on policies with the Company will not be delayed.

FINANCIAL STATEMENTS

Financial Statements for the VEL Account and the Company are included in this
prospectus beginning immediately after

<PAGE>

this section.

The financial statements of the Company which are included in this prospectus
should be considered only as bearing on the ability of the Company to meet
its obligations under the Policy. They should not be considered as bearing
on the investment performance of the assets held in the VEL Account.

APPENDIX A - OPTIONAL BENEFITS

This Appendix is intended to provide only a very brief overview of additional
insurance benefits available by rider. For more information, contact your
agent. The following supplemental benefits are available for issue under the
Policies for an additional charge.

WAIVER OF PREMIUM RIDER

This rider provides that during periods of total disability continuing
more than four months the Company will add to the Policy Value each month
an amount selected by you or the amount needed to pay the Policy charges,
whichever is greater. This value will be used to keep the Policy in
force. This benefit is subject to the Company's maximum issue benefits.
Its cost will change yearly.

GUARANTEED INSURABILITY RIDER

This rider guarantees that insurance may be added at various option
dates without Evidence of Insurability. This benefit may be exercised on
the option dates even if the Insured is disabled.

OTHER INSURED RIDER

This rider provides a term insurance benefit for up to five Insureds.
At present this benefit is only available for the spouse and children of
the primary Insured. The rider includes a feature that allows the "other
Insured" to convert the coverage to a flexible premium adjustable life
insurance policy.

CHILDREN'S INSURANCE RIDER

This rider provides coverage for eligible minor children. It also
covers future children, including adopted children and step children.

ACCIDENTAL DEATH BENEFIT RIDER

This rider pays an additional benefit for death resulting from a
covered accident prior to the Policy anniversary nearest the Insured's
Age 70.

EXCHANGE OPTION RIDER

This rider allows you to use the Policy to insure a different person,
subject to Company guidelines.

LIVING BENEFITS RIDER

This rider permits part of the proceeds of the Policy to be available
before death if the Insured becomes terminally ill or is permanently
confined to a nursing home.

APPENDIX B - PAYMENT OPTIONS

PAYMENT OPTIONS - Upon written request, the Surrender Value or all or part of
the Death Proceeds may be placed under one or more of the payment options
below or any other option offered by the Company. If you do not make an
election, the Company will pay the benefits in a single sum. A certificate
will be provided to the payee describing the payment option selected.

If a payment option is selected, the Beneficiary may pay to the Company any
amount that would otherwise be deducted from the Sum Insured.

The amounts payable under a payment option for each $1,000 value applied will
be the greater of:

(a) the rate per $1,000 of value applied based on the Company's
non-guaranteed current payment option rates for the

<PAGE>

Policies; or

(b) the rate in the Policy for the applicable payment option.

The following payment options are currently available. The amounts payable
under these options are paid from the General Account. None are based on the
investment experience of the Variable Account.

Option A: PAYMENTS FOR A SPECIFIED NUMBER OF YEARS. The Company will make
equal payments for any selected number of years (not greater than
thirty). Payments may be made annually, semi-annually, quarterly
or monthly.

Option B: LIFETIME MONTHLY PAYMENTS. Payments are based on the payee's age
on the date the first payment will be made. One of three variations
may be chosen. Depending upon this choice, payments will end:

(1) upon the death of the payee, with no further payments due (Life
Annuity), or

(2) upon the death of the payee, but not before the sum of the
payments made first equals or exceeds the amount applied
under this option (Life Annuity with Installment Refund),

(3) upon the death of the payee, but not before a selected period
(5, 10 or 20 years) has elapsed (Life Annuity with Period
Certain).

Option C: INTEREST PAYMENTS. The Company will pay interest at a rate
determined by the Company each year but which will not be less
than 3 1/2%. Payments may be made annually, semi-annually,
quarterly or monthly. Payments will end when the amount left with
the Company has been withdrawn. However, payments will not
continue after the death of the payee. Any unpaid balance plus
accrued interest will be paid in a lump sum.

Option D: PAYMENTS FOR A SPECIFIED AMOUNT. Payments will be made until the
unpaid balance is exhausted. Interest will be credited to the
unpaid balance. The rate of interest will be determined by the
Company each year but will not be less than 3 1/2%. Payments may
be made annually, semi-annually, quarterly or monthly. The
payment level selected must provide for the payment each year of
at least 8% of the amount applied.

Option E: LIFETIME MONTHLY PAYMENTS FOR TWO PAYEES. One of three variations
may be chosen. After the death of one payee, payments will
continue to the survivor:

(1) in the same amount as the original amount;

(2) in an amount equal to 2/3 of the original amount; or

(3) in an amount equal to 1/2 of the original amount.

Payments are based on the payees' ages on the date the
first payment is due. Payments will end upon the death of the
surviving payee.

SELECTION OF PAYMENT OPTIONS - The amount applied under any one option for
any one payee must be at least $5,000. The periodic payment for any one
payee must be at least $50.

Subject to your and/or the Beneficiary's provision any option selection may
be changed before the Death Proceeds becomes payable. If you make no
selection, the Beneficiary may select an option when the Death Proceeds
becomes payable.

If the amount of monthly income payments under Option B(3) for the attained
age of the payee are the same for different periods certain, the Company will
deem an election to have been made for the longest period certain which could
have been elected for such age and amount.

You may give the Beneficiary the right to change from Option C or D to any
other option at any time. If the payee selects Option C or D when this
policy becomes a claim, the right may be reserved to change to any other
option. The payee who elects to change options must be a payee under the
option selected.

ADDITIONAL DEPOSITS - An additional deposit may be made to any proceeds when
they are applied under Option B or E. A charge not to exceed 3% will be
made. The Company may limit the amount of this deposit.

RIGHTS AND LIMITATIONS - A payee does not have the right to assign any amount
payable under any option. A payee does not have the right to commute any

<PAGE>

amount payable under Option B or E. A payee will have the right to commute
any amount payable under Option A only if the right is reserved in the
written request selecting the option. If the right to commute is exercised,
the commuted values will be computed at the interest rates used to calculate
the benefits. The amount left under Option C, and any unpaid balance under
Option D, may be withdrawn by the payee only as set forth in the written
request selecting the option.

A corporation or fiduciary payee may select only option A, C or D. Such
selection will be subject to the consent of the Company.

PAYMENT DATES - The first payment under any option, except Option C, will be
due on the date this policy matures by death or otherwise, unless another
date is designated. Payments under Option C begin at the end of the first
payment period.

The last payment under any option will be made as stated in the description
of that option. However, should a payee under Option B or E die prior to the
due date of the second monthly payment, the amount applied less the first
monthly payment will be paid in a lump sum or under any option other than
Option E. A lump sum payment will be made to the surviving payee under
Option E or the succeeding payee under Option B.

APPENDIX C - ILLUSTRATIONS OF SUM INSURED, POLICY VALUES
AND ACCUMULATED PREMIUMS

The following tables illustrate the way in which a Policy's Sum Insured
and Policy Value could vary over an extended period of time. They assume
that all premiums are allocated to and remain in the VEL Account for the
entire period shown and are based on hypothetical gross investment rates of
return for the Underlying Fund (i.e., investment income and capital gains and
losses, realized or unrealized) equivalent to constant gross (after tax)
annual rates of 0%, 6%, and 12%.

The tables illustrate a Policy issued to a person, Age 30, under a standard
Premium Class and qualifying for the non-smoker discount, and a Policy issued
to a person, Age 45, under a standard Premium Class and qualifying for the
non-smoker discount. The tables also illustrate the guaranteed cost of
insurance rates and the current cost of insurance rates as presently in
effect.

The Policy Values and Death Proceeds would be different from those shown if
the gross annual investment rates of return averaged 0%, 6%, and 12% over a
period of years, but fluctuated above or below such averages for individual
policy years. The values would also be different depending on the allocation
of a Policy's total Policy Value among the Sub-Accounts of the VEL Account,
if the actual rates of return averaged 0%, 6% or 12, but the rates of each
Underlying Fund varied above and below such averages.

The amounts shown for the Death Proceeds and Policy Values take into account
the deduction from premium for the premium tax charge, the Monthly Deduction
from Policy Value, and the daily charge against the VEL Account for mortality
and expense risks equivalent to the maximum effective annual rate of 0.90%
of the average daily value of the assets in the VEL Account attributable to
the Policies (the actual mortality and expense risk charge is currently
0.65%). The amounts shown in the tables also take into account the
Underlying Investment Company advisory fees and operating expenses, which are
assumed to be at an annual rate of 0.85% of the average daily net assets of
the Underlying Investment Company. The actual fees and expenses of each
Underlying Investment Company vary, and in 1995 ranged from an annual rate of
0.36% to an annual rate of 1.55% of average daily net assets. The fees and
expenses associated with your Policy may be more or less than 0.85% in the
aggregate, depending upon how you make allocations of Policy Value among the
Sub-Accounts.

Under its Management Agreement with the Trust, Allmerica Investments has
declared a voluntary expense limitation of 1.50% of average net average
assets for the Select International Equity Fund, 1.20% for the Growth Fund,
1.00% for the Investment Grade Income Fund, 0.60% for the Money Market Fund,
0.60% for the Equity Index Fund, 1.00% for the Government Bond Fund, 1.35%
for the Select Aggressive Growth Fund and Select Capital Appreciation Fund,
1.20% for the Select Growth Fund, 1.10% for the Select Growth and Income
Fund, and 1.25% for the Small Cap Value Fund. Without the effect of the
expense limitation, in 1995 the total operation expenses of the Select
Capital Appreciation Fund would have been 1.42% of average net assets.
Fidelity Management has voluntarily agreed to temporarily limit the total
operating expenses (excluding interest, taxes, brokerage commissions and
extraordinary expenses) of the Equity-Income, Growth and Overseas Portfolios
to an annual rate of 1.50%, and of the High Income Portfolio to an annual
rate of 1.00%, and of the Asset Manager Portfolio to an annual rate of 1.25%,
of each Portfolio's average net assets. Delaware International has agreed
voluntarily to waive its management fees and reimburse the International
Equity Series to limit certain expenses to 8/10 of 1% of the average daily
net assets. Except as noted, in 1995 the expenses of the Underlying Funds
did not exceed the voluntary expense limitations.

<PAGE>

Taking into account the maximum 0.90% charge to the VEL Account and the
assumed 0.85% charge for Underlying Investment Company advisory fees and
operating expenses, the gross annual rates of investment return of 0%, 6% and
12% correspond to net annual rates of -1.75%, 4.25% and 10.25%, respectively.

The hypothetical returns shown in the table do not reflect any charges for
income taxes against the VEL Account since no charges are currently made.
However, if in the future such charges are made, in order to produce
illustrated death benefits and cash values, the gross annual investment rate
of return would have to exceed 0%, 6% or 12% by a sufficient amount to cover
the tax charges.

The second column of the tables show the amount which would accumulate if an
amount equal to the Guideline Annual Premium were invested to earn interest,
(after taxes) at 5% compounded annually.

The tables illustrate the Policy Values that would result based upon the
assumptions that no Policy loans have been made, that you have not requested
an increase or decrease in the initial Face Amount, that no partial
withdrawals have been made, and that no transfers above 6 have been made in
any Policy year (so that no transaction or transfer charges have been
incurred).

Upon request, the Company will provide a comparable illustration based upon
the proposed Insured's Age, sex, and underwriting classification, and the
requested Face Amount, Sum Insured Option, and riders.

TO CHOOSE THE SUB-ACCOUNTS WHICH WILL BEST MEET YOUR NEEDS AND OBJECTIVES,
CAREFULLY READ THE PROSPECTUSES OF THE TRUST, VIP, VIP II, T. ROWE PRICE AND
DGPF ALONG WITH THIS PROSPECTUS.

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
VARIABLE EXCEPTIONAL LIFE POLICY

Non-Smoker Age 30
Specified Face Amount = $75,000
Sum Insured Option 2

CURRENT COST OF INSURANCE CHARGES

Premiums Hypothetical 0% Hypothetical 6% Hypothetical 12%
Paid Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest

Policy At 5% Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

1 1,470 393 1,221 76,221 471 1,299 76,299 549 1,377 76,377
2 3,014 1,592 2,420 77,420 1,824 2,652 77,652 2,066 2,894 77,894
3 4,634 2,768 3,596 78,596 3,234 4,062 79,062 3,738 4,566 79,566
4 6,336 3,955 4,750 79,750 4,734 5,529 80,529 5,611 6,406 81,406
5 8,123 5,185 5,881 80,881 6,360 7,055 82,055 7,736 8,432 83,432
6 9,999 6,392 6,989 81,989 8,048 8,644 83,644 10,066 10,663 85,663
7 11,969 7,576 8,073 83,073 9,799 10,296 85,296 12,621 13,118 88,118
8 14,037 8,737 9,135 84,135 11,616 12,013 87,013 15,422 15,820 90,820
9 16,209 9,874 10,172 85,172 13,500 13,798 88,798 18,495 18,793 93,793
10 18,490 10,986 11,185 86,185 15,454 15,653 90,653 22,865 22,064 97,064

11 20,884 12,174 12,174 87,174 17,579 17,579 92,579 25,664 25,664 100,664
12 23,398 13,137 13,137 88,137 19,580 19,580 94,580 29,625 29,625 104,625
13 26,038 14,077 14,077 89,077 21,657 21,657 96,657 33,983 33,983 108,983
14 28,810 14,991 14,991 89,991 23,814 23,814 98,814 38,779 38,779 113,779
15 31,720 15,880 15,880 90,880 26,054 26,054 101,054 44,057 44,057 119,057

16 34,777 16,743 16,743 91,743 28,377 28,377 103,377 49,865 49,865 124,865
17 37,985 17,580 17,580 92,580 30,788 30,788 105,788 56,256 56,256 131,256
18 41,355 18,391 18,391 93,391 33,290 33,290 108,290 63,290 63,290 138,290
19 44,892 19,174 19,174 94,174 35,884 35,884 110,884 71,031 71,031 146,031
20 48,607 19,930 19,930 94,930 38,574 38,574 113,574 79,550 79,550 154,550

Age 60 97,665 25,579 25,579 100,579 71,166 71,166 146,166 229,234 229,234 307,173
Age 65 132,771 26,546 26,546 101,546 91,516 91,516 166,516 378,082 378,082 461,260
Age 70 177,576 25,537 25,537 100,537 114,403 114,403 189,403 617,137 617,137 715,879
Age 75 234,759 21,566 21,566 96,566 139,062 139,062 214,062 1,001,969 1,001,969 1,076,969

</TABLE>

(1) Assumes a $1,400 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different
frequency or in different amounts.

(2) Assumes that no policy loan has been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient
Policy Value

THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A
POLICYOWNER, AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE UNDERLYING
FUNDS. THE VALUE OF UNITS, CASH VALUE, AND DEATH BENEFIT FOR A POLICY WOULD
BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF INVESTMENT RETURN
AVERAGES 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE AND
BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS, OR IF ANY PREMIUMS WERE
ALLOCATED OR CASH VALUE TRANSFERRED TO THE FIXED ACCOUNT. NO REPRESENTATIVES
CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
VARIABLE EXCEPTIONAL LIFE POLICY

Non-Smoker Age 30
Specified Face Amount = $75,000
Sum Insured Option 2

GUARANTEED COST OF INSURANCE CHARGES

Premiums Hypothetical 0% Hypothetical 6% Hypothetical 12%
Paid Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Policy At 5% Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

1 1,470 349 1,178 76,178 426 1,254 76,254 503 1,331 76,331
2 3,014 1,504 2,332 77,332 1,731 2,559 77,559 1,968 2,796 77,796
3 4,634 2,637 3,465 78,465 3,090 3,918 78,918 3,580 4,408 79,408
4 6,336 3,779 4,574 79,574 4,536 5,331 80,331 5,388 6,183 81,183
5 8,123 4,963 5,658 80,658 6,102 6,798 81,798 7,438 8,133 83,133

6 9,999 6,123 6,719 81,719 7,726 8,322 83,322 9,683 10,279 85,279
7 11,969 7,258 7,755 82,755 9,408 9,905 84,905 12,140 12,637 87,637
8 14,037 8,367 8,765 83,765 11,149 11,547 86,547 14,832 15,229 90,229
9 16,209 9,449 9,747 84,747 12,951 13,249 88,249 17,779 18,077 93,077
10 18,490 10,503 10,702 85,702 14,813 15,012 90,012 21,006 21,205 96,205

11 20,884 11,629 11,629 86,629 16,839 16,839 91,839 24,642 24,642 99,642
12 23,398 12,526 12,526 87,526 18,730 18,730 93,730 28,417 28,417 103,417
13 26,038 13,396 13,396 88,396 20,688 20,688 95,688 32,565 32,565 107,565
14 28,810 14,234 14,234 89,234 22,712 22,712 97,712 37,122 37,122 112,122
15 31,720 15,042 15,042 90,042 24,808 24,808 99,808 42,131 42,131 117,131

16 34,777 15,818 15,818 90,818 26,974 26,974 101,974 47,632 47,632 122,632
17 37,985 16,562 16,562 91,562 29,212 29,212 104,212 53,678 53,678 128,678
18 41,355 17,272 17,272 92,272 31,524 31,524 106,524 60,322 60,322 135,322
19 44,892 17,947 17,947 92,947 33,911 33,911 108,911 67,623 67,623 142,623
20 48,607 18,586 18,586 93,586 36,375 36,375 111,375 75,646 75,646 150,646

Age 60 97,665 22,267 22,267 97,267 64,992 64,992 139,992 215,170 215,170 290,170
Age 65 132,771 21,310 21,310 96,310 81,383 81,383 156,383 352,366 352,366 429,887
Age 70 177,576 16,934 16,934 91,934 97,538 97,538 172,538 570,328 570,328 661,581
Age 75 234,759 7,121 7,121 82,121 110,763 110,763 185,763 917,144 917,144 992,144

</TABLE>

(1) Assumes a $1,400 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency
or in different amounts.

(2) Assumes that no policy loan has been made. Excessive loans or withdrawals
may cause this Policy to lapse because of insufficient Policy Value

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
VARIABLE EXCEPTIONAL LIFE POLICY

Non-Smoker Age 45
Specified Face Amount = $250,000
Sum Insured Option 1

CURRENT COST OF INSURANCE CHARGES

1 4,410 153 3,502 250,000 382 3,731 250,000 611 3,960 250,000
2 9,040 3,565 6,914 250,000 4,242 7,591 250,000 4,948 8,297 250,000
3 13,903 6,887 10,236 250,000 8,236 11,585 250,000 9,699 13,048 250,000
4 19,008 10,249 13,464 250,000 12,500 15,715 250,000 15,039 18,254 250,000
5 24,368 13,787 16,601 250,000 17,174 19,987 250,000 21,150 23,963 250,000

6 29,996 17,232 19,644 250,000 21,993 24,405 250,000 27,814 30,225 250,000
7 35,906 20,577 22,587 250,000 26,958 28,967 250,000 35,083 37,093 250,000
8 42,112 23,823 25,431 250,000 32,074 33,682 250,000 43,024 44,632 250,000
9 48,627 26,969 28,174 250,000 37,348 38,554 250,000 51,708 52,913 250,000
10 55,469 30,010 30,814 250,000 42,783 43,587 250,000 61,212 62,015 250,000

11 62,652 33,346 33,346 250,000 48,784 48,784 250,000 72,025 72,025 250,000
12 70,195 35,735 35,735 250,000 54,122 54,122 250,000 83,014 83,014 250,000
13 78,114 37,977 37,977 250,000 59,604 59,604 250,000 95,092 95,092 250,000
14 86,430 40,076 40,076 250,000 65,244 65,244 250,000 108,393 108,393 250,000
15 95,161 42,023 42,023 250,000 71,043 71,043 250,000 123,055 123,055 250,000

16 104,330 43,806 43,806 250,000 77,002 77,002 250,000 139,237 139,237 250,000
17 113,956 45,448 45,448 250,000 83,155 83,155 250,000 157,141 157,141 250,000
18 124,064 46,935 46,935 250,000 89,504 89,504 250,000 176,973 176,973 250,000
19 134,677 48,253 48,253 250,000 96,054 96,054 250,000 198,972 198,972 250,000
20 145,820 49,388 49,388 250,000 102,813 102,813 250,000 223,320 223,320 272,451

Age 60 95,161 42,023 42,023 250,000 71,043 71,043 250,000 123,055 123,055 250,000
Age 65 142,820 49,388 49,388 250,000 102,813 102,813 250,000 223,320 223,320 272,451
Age 70 210,477 51,357 51,357 250,000 139,910 139,910 250,000 386,432 386,432 448,262
Age 75 292,995 44,916 44,916 250,000 184,624 184,624 250,000 649,170 649,170 694,611

</TABLE>

(1) Assumes a $4,200 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency
or in different amounts.

(2) Assumes that no policy loan has been made. Excessive loans or withdrawals
may cause this Policy to lapse because of insufficient Policy Value.

THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND
SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A
POLICYOWNER, AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE UNDERLYING
FUNDS. THE VALUE OF UNITS, CASH VALUE, AND DEATH BENEFIT FOR A POLICY WOULD
BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF INVESTMENT RETURN
AVERAGES 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE AND
BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS, OR IF ANY PREMIUMS WERE
ALLOCATED OR CASH VALUE TRANSFERRED TO THE FIXED ACCOUNT. NO REPRESENTATIVES
CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
VARIABLE EXCEPTIONAL LIFE POLICY

Non-Smoker Age 45
Specified Face Amount = $250,000
Sum Insured Option 1
<TABLE>
<CAPTION>

GUARANTEED COST OF INSURANCE CHARGES

1 4,410 0 3,167 250,000 36 3,385 250,000 255 3,604 250,000
2 9,040 2,879 6,228 250,000 3,514 6,863 250,000 4,177 7,526 250,000
3 13,903 5,833 9,182 250,000 7,087 10,436 250,000 8,447 11,796 250,000
4 19,008 8,807 12,022 250,000 10,884 14,099 250,000 13,231 16,446 250,000
5 24,368 11,935 14,748 250,000 15,043 17,857 250,000 18,702 21,515 250,000

6 29,996 14,947 17,358 250,000 19,298 21,709 250,000 24,635 27,046 250,000
7 35,906 17,829 19,839 250,000 23,639 25,648 250,000 31,066 33,075 250,000
8 42,112 20,574 22,182 250,000 28,061 29,669 250,000 38,044 39,651 250,000
9 48,627 23,170 24,376 250,000 32,558 33,764 250,000 45,619 46,825 250,000
10 55,469 25,603 26,407 250,000 37,119 37,923 250,000 53,849 54,652 250,000

11 62,652 28,268 28,268 250,000 42,145 42,145 250,000 63,206 63,206 250,000
12 70,195 29,950 29,950 250,000 46,426 46,426 250,000 72,568 72,568 250,000
13 78,114 31,445 31,445 250,000 50,762 50,762 250,000 82,830 82,830 250,000
14 86,430 32,744 32,744 250,000 55,154 55,154 250,000 94,103 94,103 250,000
15 95,161 33,837 33,837 250,000 59,598 59,598 250,000 106,511 106,511 250,000

16 104,330 34,697 34,697 250,000 64,077 64,077 250,000 120,186 120,186 250,000
17 113,956 35,302 35,302 250,000 68,583 68,583 250,000 135,293 135,293 250,000
18 124,064 35,617 35,617 250,000 73,094 73,094 250,000 152,015 152,015 250,000
19 134,677 35,596 35,596 250,000 77,583 77,583 250,000 170,572 170,572 250,000
20 145,820 35,194 35,194 250,000 82,028 82,028 250,000 191,230 191,230 250,000

Age 60 95,161 33,837 33,837 250,000 59,598 59,598 250,000 106,511 106,511 250,000
Age 65 142,820 35,194 35,194 250,000 82,028 82,028 250,000 191,230 191,230 250,000
Age 70 210,477 26,069 26,069 250,000 103,101 103,101 250,000 331,550 331,550 384,598
Age 75 292,995 0 0 0 119,588 119,588 250,000 555,584 555,584 594,475

</TABLE>

(1) Assumes a $4,200 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency
or in different amounts.

(2) Assumes that no policy loan has been made. Excessive loans or withdrawals
may cause this Policy to lapse because of insufficient Policy Value

<PAGE>

APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES

A separate Surrender Charge is calculated upon issuance of the Policy and upon
each increase in Face Amount. The maximum Surrender Charge calculated upon
issuance of the Policy is equal to $8.50 per thousand dollars of the initial
Face Amount plus 30% of the Guideline Annual Premium. The maximum Surrender
Charge for an increase in Face Amount is $8.50 per thousand dollars of
increase, plus 30% of the Guideline Annual Premium for the increase. The
calculation may be summarized in the following formula:

Maximum Surrender Charge=(8.5 X FACE AMOUNT) + (0.3 X Guideline Annual Premium)
-----------
1000

In accordance with limitations under state insurance regulations, the amount
of the maximum surrender charges at certain Ages will not exceed a specified
amount per $1,000 of initial Face Amount (or increase in Face Amount) as
shown below.

The maximum surrender charge remains level for the first 44 policy months,
reduces by 1% per month for the next 76 policy months, and is zero
thereafter. The actual surrender charge imposed may be less than the maximum.
The actual surrender charge imposed will be the lesser of either the maximum
surrender charge or the sum of $8.50 per thousand dollars of Face Amount plus
30% of premiums paid which are associated with the initial Face Amount or
increase, as applicable.

The Factors used in calculating the maximum Surrender Charges vary with the
issue Age and Premium Class (smoker) as indicated in the table below.

<PAGE>

The Factors used in calculating the maximum surrender charges vary with the
issue Age and Premium Class (Smoker) as indicated in the table below.

MAXIMUM SURRENDER CHARGE PER $1,000 FACE AMOUNT

Age at Age at
issue or Unisex Unisex issue or Unisex Unisex
increase Nonsmoker Smoker increase Nonsmoker Smoker
- -------- --------- ------ -------- --------- ------

0 7.53 41 12.88 14.18
1 7.54 42 13.08 14.46
2 7.66 43 13.30 14.75
3 7.79 44 13.53 15.05
4 7.93 45 13.77 15.37
5 8.08 46 14.03 15.71
6 8.24 47 14.31 16.07
7 8.40 48 14.60 16.45
8 8.57 49 14.91 16.85
9 8.76 50 15.24 17.27
10 8.96 51 15.59 17.72
11 9.16 52 15.97 18.20
12 9.38 53 16.37 18.70
13 9.60 54 16.80 19.23
14 9.83 55 17.25 19.80
15 10.07 56 17.73 20.39
16 10.30 57 18.25 21.01
17 10.53 58 18.80 21.68
18 9.91 10.77 59 19.39 22.38
19 10.06 10.84 60 20.02 23.14
20 10.22 10.92 61 20.70 23.94
21 10.39 10.99 62 21.42 24.79
22 10.57 11.08 63 22.20 25.70
23 10.64 11.16 64 23.04 26.66
24 10.71 11.26 65 23.93 27.67
25 10.78 11.36 66 24.88 28.74
26 10.86 11.46 67 25.90 29.87
27 10.95 11.58 68 27.00 31.07
28 11.04 11.70 69 28.18 32.35
29 11.14 11.83 70 29.46 33.73
30 11.24 11.97 71 30.85 35.21
31 11.35 12.12 72 32.33 36.79
32 11.47 12.28 73 33.94 38.48
33 11.59 12.44 74 35.66 40.26
34 11.72 12.62 75 37.50 42.14
35 11.86 12.81 76 39.46 44.11
36 12.01 13.01 77 41.56 45.84
37 12.16 13.22 78 43.82 45.59
38 12.32 13.44 79 44.20 45.31
39 12.50 13.67 80 43.88 45.02
40 12.68 13.92

<PAGE>

EXAMPLES

For the purposes of these examples, assume that a person, Age 45, non-smoker
purchases a $100,000 policy. In this example the Guideline Annual Premium
equals $1,682.90. His maximum surrender charge at issue is calculated as
follows:

(1) Deferred Administrative Charge $850.00
($8.50/$1,000 of Face Amount)

(2) Deferred Sales Charge $504.87
(30% of Guideline Annual Premium) ---------

Maximum Surrender Charge $1,354.87

The actual surrender charge is the smaller of the maximum surrender charge
and the following sum:

(1) Deferred Administrative Charge $850.00
($8.50/$1,000 of Face Amount)

(2) Deferred Sales Charge Varies
(30% of Premiums Paid associated
with the initial face amount) -------

Sum of (1) and (2)

The maximum surrender charge is $1,354.87. All premiums are associated with
the initial face amount unless the face amount is increased.

EXAMPLE 1:

Assume the Policyowner surrenders the Policy in the 10th policy month, having
paid total premiums of $1,500. The actual surrender charge would be $1,300.
If, instead of $1,500, he had paid total premiums of $1,682.90 or greater,
the actual surrender charge would be $1,354.87.

EXAMPLE 2:

Assume the Policyowner surrenders the Policy in the 54th month, having paid
total premiums of $1,500. After the 44th policy month, the maximum surrender
charge decreases by 1% per month ($13.5487 per month in this example). In
this example the maximum surrender charge would be $1,219.38. The actual
surrender charge is $1,219.38. If instead of $1,500, he had paid total
premiums of less than $1,231.27, the actual surrender charge would be less
than $1,219.38.

EXAMPLE 3:

This example illustrates the calculation of the surrender charge for an
increase. A separate surrender charge is calculated when the face amount of
the Policy is increased. Assume our sample policyowner increases his face
amount to $250,000 on the 25th monthly payment date at Age 47. In this
example the Guideline Annual Premium for the increase is $2,681.26.

The maximum surrender charge for the increase is $2,109.49 as calculated
below:

(1) Deferred Administrative Charge $1,275.00
($8.50/$1,000 of Face Amount)

(2) Deferred Sales Charge $804.38
(30% of Guideline Annual Premium for the increase) ---------

Maximum Surrender Charge $2,079.38

<PAGE>

The actual surrender charge for the increase is the smaller of the maximum
surrender charge for the increase and the following sum:

(1) Deferred Administrative Charge $1,275.00

(2) Deferred Sales Charge Varies
(30% of the Policy value, on the effective date
of the increase, associated with the increase)

(3) (30% of Premiums paid associated the increase) Varies

--------
Sum of (1), (2), and (3)

To calculate the actual surrender charges, premium and accumulated value must
be allocated between the initial face amount and the increase. This is done
as follows:

A. Premium is allocated to the initial face amount if it is received before
an application for an increase.

B. Premium is associated with the base policy and the increase in
proportion to their respective Guideline Annual Premiums if the premium
is received after an application for an increase. In this example,
39.4% of premium ($1,740.95/$4,422.21) is allocated to the initial
face amount and 60.6% of premium ($2,681.26/$4,422.21) is allocated
to the increase.

C. The policy value on the effective date of an increase is also
allocated between the initial face amount and the increase in
proportion to their Guideline Annual Premiums. In this example 60.6%
($2,681.26/$4,422.21) of the Policy value will be allocated to the
increase.

Continuing the example, assume that the policyowner has paid $1,500 of
premium before and $2,000 after the effective date of the increase. Also,
assume that the Policy Value of the policy on the effective date of the
increase is $1,300. The following values result when the policy is
surrendered in the 54th policy month.

A. Related to the Initial Face Amount

1. The maximum surrender charge began to decrease in the 44th policy
month and now equals $1,219.38.

2. The actual surrender charge is the lesser of $1,219.38 and the
following sum.

(1) Deferred Administrative Charge $850.00

(2) 30% of premium paid before the increase $450.00

(3) 11.82% (.30 X .394) of premium
paid after the increase $236.40
-------
$1,536.40

The actual surrender charge for the initial face amount is thus $1,219.38.

<PAGE>

A. Related to the Increase in Face Amount

1. The maximum surrender charge is $2,079.38, decreasing by 1% per month
beginning in the 68th policy month (44 months after the effective
date of the increase).

2. The actual surrender charge is the lesser of $2,079.38 and the following
sum.

(1) Deferred Administrative Charge $1,275.00

(2) 18.18% (.30 x .606) of the $1,300 Policy value
on the effective date of the increase $236.34

(3) 18.18% of the $2,000.00 of premium paid
after the increase paid after the increase $363.60
---------
$1,874.94

The surrender charge for the increase in face amount is $1,874.94. The total
surrender charge on the Policy is the sum of the surrender charge for the
initial face amount plus the surrender charge for the increase. The total
surrender charge is therefore $3,094.32 (the sum of $1,219.38 + $1,874.94).

EXAMPLE 4:

This example illustrates the calculation of the charges on partial withdrawal
and their impact on the surrender charge(s). In addition to the facts in
Example 3, assume that a $1,000 partial withdrawal is made in the 36th Policy
month. Assume that the Policy value on the date of the partial withdrawal
request was $1,500. The partial withdrawal charge is $42.50 (10% of Policy
value, $150 in this example, may be withdrawn at no charge other than the
transaction charge. The balance of $850 is assessed a charge of 5%.) A
transaction charge of $20 (equal to the lesser of $25 or 2% of the amount
withdrawn) would also be assessed.

The maximum and actual surrender charges for the increase are reduced by the
partial withdrawal charge of $42.50 (but not the transaction charge of $20).
When the policyowner surrenders the policy in the 54th policy month, the
maximum surrender charge for the increase is $2,036.88 (the difference of
$2,079.38 - $42.50) and the actual surrender charge for the increase is
$1,932.44 (the difference of $1,874.94 - $42.50).

The total surrender charge on the Policy is $3,051.82 (the sum of $1,219.38 +
$1,832.44).

51
<PAGE>

ALLMERICA FINANCIAL
LIFE INSURANCE AND
ANNUITY COMPANY

(formerly SMA Life Assurance Company)

STATUTORY FINANCIAL STATEMENTS

DECEMBER 31, 1995

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY

December 31, 1995

Statutory Financial Statements
Report of Independent Accountants . . . . . . . . . . . . . . . . . 1
Statement of Assets, Liabilities, Surplus and Other Funds . . . . . 3
Statement of Operations and Changes in Capital and Surplus. . . . . 4
Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Statutory Financial Statements . . . . . . . . . . . . . . 6

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholder of
Allmerica Financial Life Insurance and Annuity Company
(formerly known as SMA Life Assurance Company)

We have audited the accompanying statutory basis statement of assets,
liabilities, surplus and other funds of Allmerica Financial Life Insurance and
Annuity Company as of December 31, 1995 and 1994, and the related statutory
basis statements of operations and changes in capital and surplus, and of cash
flows for each of the three years ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As described more fully in Note 1 to the financial statements, the Company
prepared these financial statements using accounting practices prescribed or
permitted by the Insurance Department of the State of Delaware, which practices
differ from generally accepted accounting principles. The effects on the
financial statements of the variances between the statutory basis of accounting
and generally accepted accounting principles, although not reasonably
determinable, are presumed to be material.

In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of Allmerica Financial Life Insurance and Annuity Company as of December 31,
1995 and 1994, or the results of its operations or its cash flows for each of
the three years ended December 31, 1995.

<PAGE>

To the Board of Directors and Stockholder of
Allmerica Financial Life Insurance and Annuity Company
(formerly known as SMA Life Assurance Company)

Page 2

In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets, liabilities, surplus and other funds of
Allmerica Financial Life Insurance and Annuity Company as of December 31, 1995
and 1994, and the results of its operations and its cash flows for each of the
three years ended December 31, 1995, on the basis of accounting described in
Note 1.

As discussed in Note 1 to the financial statements, the Company's parent, State
Mutual Life Assurance Company of America, converted from a Massachusetts mutual
life insurance company to a Massachusetts stock life insurance company on
October 16, 1995. In connection with this transaction, the Company changed its
name to Allmerica Financial Life Insurance and Annuity Company and its parent
became a wholly-owned subsidiary of Allmerica Financial Corporation.

/s/Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
Boston, MA

February 5, 1996

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

STATEMENT OF ASSETS, LIABILITIES, SURPLUS AND
OTHER FUNDS
as of December 31,
(In thousands)

ASSETS 1995 1994
---- ----
<S> <C> <C>
Cash $ 7,791 $ 7,248
Investments:
Bonds 1,659,575 1,595,275
Stocks 18,132 12,283
Mortgage loans 239,522 295,532
Policy loans 122,696 116,600
Real estate 40,967 51,288
Short term investments 3,500 45,239
Other invested assets 40,196 27,443
----------- -----------

Total cash and investments 2,132,379 2,150,908

Premiums deferred and uncollected (1,231) 5,452
Investment income due and accrued 38,413 39,442
Other assets 6,060 10,569
Assets held in separate accounts 2,978,409 1,869,695
----------- -----------

$ 5,154,030 $ 4,076,066
----------- -----------
----------- -----------

LIABILITIES, SURPLUS AND OTHER FUNDS

Liabilities:

Policy liabilities:
Life reserves $ 856,239 $ 890,880
Annuity and other fund reserves 865,216 928,325
Accident and health reserves 167,246 121,580
Claims payable 11,047 11,720
----------- -----------

Total policy liabilities 1,899,748 1,952,505

Expenses and taxes payable 20,824 17,484
Other liabilities 27,499 36,466
Asset valuation reserve 31,556 20,786
Obligations related to separate account business 2,967,547 1,859,502
----------- -----------

Total liabilities 4,947,174 3,886,743
----------- -----------

Surplus and Other Funds:
Common stock, $1,000 par value
Authorized - 10,000 shares
Issued and outstanding - 2,517 shares 2,517 2,517
Paid-in surplus 199,307 199,307
Unassigned surplus (deficit) 4,282 (13,621)
Special contingency reserves 750 1,120
----------- -----------
Total surplus and other funds 206,856 189,323
----------- -----------

$ 5,154,030 $ 4,076,066
----------- -----------
----------- -----------

</TABLE>

The accompanying notes are an integral part of these financial statements.

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

STATEMENT OF OPERATIONS AND
CHANGES IN CAPITAL AND SURPLUS
for the year ended December 31,
(In thousands)

<TABLE>
<CAPTION>
REVENUE 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>

Premiums and other considerations:
Life $ 156,864 $ 195,633 $ 189,285
Annuities 729,222 707,172 660,143
Accident and health 31,790 31,927 35,718
Reinsurance commissions and reserve adjustments 20,198 4,195 2,309
---------- ---------- ----------

Total premiums and other considerations 938,074 938,927 887,455

Net investment income 167,470 170,430 177,612
Realized capital losses, net of tax (2,295) (17,172) (7,225)
Other revenue 37,466 26,065 19,055
---------- ---------- ----------

Total revenue 1,140,715 1,118,250 1,076,897
---------- ---------- ----------

POLICY BENEFITS AND OPERATING EXPENSES
Policy benefits:
Claims, surrenders and other benefits 391,254 331,418 275,290
Increase (decrease) in policy reserves (22,669) 40,113 15,292
---------- ---------- ----------
Total policy benefits 368,585 371,531 290,582

Operating and selling expenses 150,215 164,175 160,928
Taxes, except capital gains tax 26,536 22,846 19,066
Net transfers to separate accounts 556,856 553,295 586,539
---------- ---------- ----------

Total policy benefits and operating expenses 1,102,192 1,111,847 1,057,115
---------- ---------- ----------

NET INCOME 38,523 6,403 19,782

CAPITAL AND SURPLUS, BEGINNING OF YEAR 189,323 182,216 171,941
Unrealized capital gains (losses) on investments 8,279 12,170 (9,052)
Transfer from (to) asset valuation reserve (10,770) (9,822) 1,974
Other adjustments (18,499) (1,644) (2,429)
---------- ---------- ----------

CAPITAL AND SURPLUS, END OF YEAR $ 206,856 $ 189,323 $ 182,216
---------- ---------- ----------
---------- ---------- ----------

</TABLE>
The accompanying notes are an integral part of these financial statements.

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

STATEMENT OF CASH FLOWS
for the year ended December 31,
(In thousands)

<TABLE>
<CAPTION>
CASH FLOW FROM OPERATING ACTIVITIES 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Premiums, deposits and other income $ 964,129 $ 962,147 $ 902,725
Allowances and reserve adjustments on
reinsurance ceded 20,693 3,279 22,185
Net investment income 170,949 173,294 182,843
Net increase in policy loans (6,096) (7,585) (7,812)
Benefits to policyholders and beneficiaries (393,472) (330,900) (298,612)
Operating and selling expenses and taxes (153,504) (193,796) (171,533)
Net transfers to separate accounts (608,480) (600,760) (634,021)
Federal income tax (excluding tax on capital gains) (6,771) (19,603) (4828)
Other sources (applications) (13,642) 19,868 7,757
---------- ---------- ----------

NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (26,194) 5,944 (1,296)
---------- ---------- ----------

CASH FLOW FROM INVESTING ACTIVITIES
Sales and maturities of long term investments:
Bonds 572,640 478,512 386,414
Stocks 481 63 64
Real estate and other invested assets 13,008 3,008 11,094
Repayment of mortgage principal 55,202 65,334 79,844
Capital gains tax (400) (968) (3,296)
Acquisition of long term investments:
Bonds (640,339) (508,603) (466,086)
Stocks (44) - -
Real estate and other invested assets (11,929) (24,544) (2,392)
Mortgage loans (415) (364) (2,266)
Other investing activities (3,206) 18,934 (27,254)
---------- ---------- ----------

NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (15,002) 31,372 (23,878)
---------- ---------- ----------

Net change in cash and short term investments (41,196) 37,316 (25,174)

CASH AND SHORT TERM INVESTMENTS
Beginning of the year 52,487 15,171 40,345
---------- ---------- ----------

End of the year $ 11,291 $ 52,487 $ 15,171
---------- ---------- ----------
---------- ---------- ----------

</TABLE>

The accompanying notes are an integral part of these financial statements.

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BASIS OF PRESENTATION - Allmerica Financial Life Insurance and
Annuity Company ("Allmerica Financial" or the "Company", formerly SMA Life
Assurance Company) is a wholly owned subsidiary of SMA Financial Corp., which is
wholly owned by First Allmerica Financial Life Insurance Company ("First
Allmerica", formerly, State Mutual Life Assurance Company of America), a stock
life insurance company. On October 16, 1995, First Allmerica converted from a
mutual life insurance company to a stock life insurance company. Concurrent
with this transaction, First Allmerica became a wholly owned subsidiary of
Allmerica Financial Corporation ("AFC").

The stockholder's equity of the Company is being maintained at a minimum level
of 5% of general account assets by First Allmerica in accordance with a policy
established by vote of First Allmerica's Board of Directors.

The Company's financial statements have been prepared on the basis of accounting
practices prescribed or permitted by the Insurance Department of the State of
Delaware and in conformity with practices prescribed by the National Association
of Insurance Commissioners (NAIC), which while common in the industry, vary in
some respects from generally accepted accounting principles. Significant
differences include:

- Bonds considered to be "available-for-sale" or "trading" are not
carried at fair value and changes in fair value are not recognized
through surplus or the statement of operations, respectively;

- The Asset Valuation Reserve, represents a reserve against possible
losses on investments and is recorded as a liability through a charge
to surplus. The Interest Maintenance Reserve is designed to include
deferred realized gains and losses (net of applicable federal income
taxes) due to interest rate changes and is also recorded as a
liability, however, the deferred net realized investment gains and
losses are amortized into future income generally over the original
period to maturity of the assets sold. These liabilities are not
required under generally accepted accounting principles;

- Total premiums, deposits and benefits on certain investment-type
contracts are reflected in the statement of operations, instead of
using the deposit method of accounting;

- Policy acquisition costs, such as commissions, premium taxes and other
items, are not deferred and amortized in relation to the revenue/gross
profit streams from the related contracts;

- Benefit reserves are determined using statutorily prescribed interest,
morbidity and mortality assumptions instead of using more realistic
expense, interest, morbidity, mortality and voluntary withdrawal
assumptions with provision made for adverse deviation;

- Amounts recoverable from reinsurers for unpaid losses are not recorded
as assets, but as offsets against the respective liabilities;

- Deferred federal income taxes are not provided for temporary
differences between amounts reported in the financial statements and
those included in the tax returns;

- Certain adjustments related to prior years are recorded as direct
charges or credits to surplus;

- Certain assets, designated as "non-admitted" assets (principally
agents' balances), are not recorded as assets, but are charged to
surplus; and,

- Costs related to other postretirement benefits are recognized only for
employees that are fully vested.

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

The preparation of financial statements in accordance with practices prescribed
or permitted by the Insurance Department of the State of Delaware and in
conformity with practices prescribed by the NAIC requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amount of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

Certain reclassifications have been made to prior year amounts to conform with
the current year presentation.

VALUATION OF INVESTMENTS - Investments in bonds are carried principally at
amortized cost, in accordance with NAIC guidelines. Preferred stocks are
carried generally at cost and common stocks are carried at market value. Policy
loans are carried principally at unpaid principal balances.

Mortgage loans on real estate are stated at unpaid principal balances, net of
unamortized discounts. Mortgage loans are reduced for losses expected by
management to be realized on transfers of mortgage loans to real estate (upon
foreclosure), on the disposition or settlement of mortgage loans and on mortgage
loans which management believes may not be collectible in full. In determining
the amount of the loss, management considers, among other things, the estimated
fair value of the underlying collateral. Investment real estate and real estate
acquired through foreclosure are carried at the lower of depreciated cost or
market value. Depreciation is generally calculated using the straight-line
method.

An asset valuation reserve (AVR) for bonds, mortgage loans, stocks, real estate,
and other invested assets is maintained by appropriations from surplus in
accordance with a formula specified by the NAIC and is classified as a
liability.

FINANCIAL INSTRUMENTS - In the normal course of business, the Company enters
into transactions involving various types of financial instruments including
investments such as bonds, stocks and mortgage loans and investment and loan
commitments. These instruments involve credit risk and also may be subject to
risk of loss due to interest rate fluctuations. The Company evaluates and
monitors each financial instrument individually and, when appropriate, obtains
collateral or other security to minimize losses.

RECOGNITION OF PREMIUM INCOME AND ACQUISITION COSTS - In general, premiums are
recognized as revenue over the premium paying period of the policies;
commissions and other costs of acquiring the policies are charged to operations
when incurred.

SEPARATE ACCOUNTS - Separate account assets and liabilities represent segregated
funds administered and invested by the Company for the benefit of certain
variable annuity and variable life contract holders. Assets consist principally
of bonds, common stocks, mutual funds, and short term obligations at market
value. The investment income, gains, and losses of these accounts generally
accrue to the contract holders and therefore, are not included in the Company's
net income. Appreciation and depreciation of the Company's interest in the
separate accounts, including undistributed net investment income, is reflected
in capital and surplus.

INSURANCE RESERVES AND ANNUITY AND OTHER FUND RESERVES - Reserves for life
insurance, annuities, and accident and health insurance are established in
amounts adequate to meet the estimated future obligations of policies in
force. These liabilities are computed based upon mortality, morbidity and
interest rate assumptions applicable to these coverages, including provision
for adverse deviation. Reserves are computed using interest rates ranging
from 3% to 6% for individual life insurance policies, 3% to 5 1/2% for
accident and health policies and 3 1/2% to 9 1/2% for annuity contracts.
Mortality, morbidity and withdrawal assumptions for all policies are based on
the Company's own experience and industry standards. The assumptions vary by
plan, age at issue, year of issue and duration. Claims reserves are computed
based on historical experience modified for expected trends in frequency and
severity. Withdrawal characteristics of annuity and other fund reserves vary
by contract. At December 31, 1995 and 1994, approximately 84% and 77%,
respectively, of the contracts (included in both the general account and
separate accounts of the Company) were not subject to discretionary
withdrawal or were subject to withdrawal at book value less surrender charge.

All policy liabilities and accruals are based on the various estimates discussed
above. Although the adequacy of these amounts cannot be assured, management
believes that it is more likely than not that policy liabilities and accruals
will be sufficient to meet future obligations of policies in force. The amount
of liabilities and accruals, however, could be revised in the near term if the
estimates discussed above are revised.

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

FEDERAL INCOME TAXES - AFC, its life insurance subsidiaries, First Allmerica and
Allmerica Financial and its non-insurance domestic subsidiaries file a
life-nonlife consolidated United States federal income tax return. Entities
included within the consolidated group are segregated into either a life
insurance or non-life insurance company subgroup. The consolidation of these
subgroups is subject to certain statutory restrictions on the percentage of
eligible non-life taxable operating losses that can be applied to offset life
company taxable income. Allmerica P&C and its subsidiaries file a separate
United States Federal income tax return.

The federal income tax allocation policies and procedures are subject to written
agreement between the companies. The federal income tax for all subsidiaries in
the consolidated return of AFC is calculated on a separate return basis. Any
current tax liability is paid to AFC. Tax benefits resulting from taxable
operating losses or credits of AFC's subsidiaries are not reimbursed to the
subsidiary until such losses or credits can be utilized by the subsidiary on a
separate return basis.

CAPITAL GAINS AND LOSSES - Realized capital gains and losses, net of applicable
capital gains tax or benefit, exclusive of those transferred to the interest
maintenance reserve ("IMR"), are included in the statement of operations.
Unrealized capital gains and losses are reflected as direct credits or charges
to capital and surplus. The IMR, which is included in other liabilities,
establishes a reserve for realized gains and losses, net of tax, resulting from
changes in interest rates on short and long term fixed income investments. Net
realized gains and losses charged to the IMR are amortized into net investment
income over the remaining life of the investment sold. The Company uses the
seriatim method of amortization for interest related gains and losses arising
from the sale of mortgages, and uses the group method to amortize interest
related gains and losses arising from all other fixed income investments.

NOTE 2 - INVESTMENTS

BONDS - The carrying value and fair value of investments in bonds are as
follows:

<TABLE>
<CAPTION>
December 31, 1995
Gross Gross
Carrying Unrealized Unrealized Fair
(In thousands) Value Appreciation Depreciation Value
----- ------------ ------------ -----
<S> <C> <C> <C> <C>
Federal government bonds $ 67,039 $ 3,063 $ - $ 70,102
State, local and government agency bonds 13,607 2,290 23 15,874
Foreign government bonds 12,121 772 249 12,644
Corporate securities 1,471,422 55,836 6,275 1,520,983
Mortgage-backed securities 95,385 951 - 96,336
---------- ---------- ---------- ----------

Total $1,659,574 $ 62,912 $ 6,457 $1,715,939
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------

December 31, 1995
Gross Gross
Carrying Unrealized Unrealized Fair
(In thousands) Value Appreciation Depreciation Value
----- ------------ ------------ -----
Federal government bonds $ 17,651 $ 8 $ 762 $ 16,897
State, local and government agency bonds 1,110 54 - 1,164
Foreign government bonds 31,863 83 3,735 28,211
Corporate securities 1,462,871 8,145 56,011 1,415,005
Mortgage-backed securities 81,780 268 1,737 80,311
---------- ---------- ---------- ----------

Total $1,595,275 $ 8,558 $ 62,245 $1,541,588
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------

</TABLE>
8

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

The carrying value and fair value by contractual maturity at December 31, 1995,
are shown below. Actual maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties or the Company may have the right to put or
sell the obligation back to the issuer. Mortgage-backed securities are
classified based on expected maturities.

<TABLE>
<CAPTION>
Carrying Fair
(In thousands) Value Value
----- -----
<S> <C> <C>
Due in one year or less $ 250,578 $ 258,436
Due after one year through five years 736,003 763,179
Due after five years through ten years 538,897 558,445
Due after ten years 134,097 135,880
---------- ----------

Total $1,659,575 $1,715,940
---------- ----------
---------- ----------

</TABLE>

MORTGAGE LOANS AND REAL ESTATE - Mortgage loans and real estate investments, are
diversified by property type and location. Real estate investments have been
obtained primarily through foreclosure. Mortgage loans are collateralized by
the related properties and are generally no more than 75% of the property value
at the time the original loan is made. At December 31, 1995 and 1994, mortgage
loan and real estate investments were distributed by the following types and
geographic regions:

<TABLE>
<CAPTION>
(In thousands)
Property Type 1995 1994
- ------------- ---- ----
<S> <C> <C>
Office buildings $ 127,149 $ 140,292
Residential 59,934 57,061
Retail 29,578 72,787
Industrial/Warehouse 38,192 39,424
Other 25,636 37,256
----------- -----------
Total $ 280,489 $ 346,820
----------- -----------
----------- -----------

Geographic Region 1995 1994
- ----------------- ---- ----
South Atlantic $ 86,410 $ 92,934
East North Central 55,991 72,704
Middle Atlantic 38,666 48,688
Pacific 32,803 39,892
West North Central 21,486 27,377
Mountain 9,939 12,211
New England 24,886 26,613
East South Central 5,487 6,224
West South Central 4,821 20,177
---------- ----------

Total $ 280,489 $ 346,820
---------- ----------
---------- ----------

</TABLE>

Reserves for mortgage loans and real estate reflected in the above amounts were
$18.9 million and $21.0 million at December 31, 1995 and 1994, respectively.

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

NET INVESTMENT INCOME - The components of net investment income for the year
ended December 31 were as follows:

<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Bonds $ 122,318 $ 123,495 $ 126,729
Stocks 1,653 1,799 953
Mortgage loans 26,356 31,945 40,823
Real estate 9,139 8,425 9,493
Policy loans 9,486 8,797 8,215
Other investments 3,951 1,651 674
Short term investments 2,252 1,378 840
---------- ---------- ----------
175,155 177,490 187,727
Less investment expenses 9,703 9,138 11,026
---------- ---------- ----------
Net investment income, before IMR amortization 165,452 168,352 176,701
IMR amortization 2,018 2,078 911
---------- ---------- ----------
Net investment income $ 167,470 $ 170,430 $ 177,612
---------- ---------- ----------
---------- ---------- ----------

</TABLE>

REALIZED CAPITAL GAINS AND LOSSES - Realized capital gains (losses) on
investments for the years ended December 31 were as follows:

<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Bonds $ 727 $ 645 $ 10,133
Stocks (263) (62) 16
Mortgage loans (1,083) (17,142) (83)
Real estate (1,892) 605 (2,044)
--------- --------- ---------
(2,511) (15,954) 8,022
Less income tax 400 968 3,296
--------- --------- ---------

Net realized capital gains (losses) before transfer to IMR (2,911) (16,922) 4,726
Net realized capital gains transferred to IMR 616 (250) (11,951)
--------- --------- ---------

Net realized capital gains (losses) $ (2,295) $(17,172) $ (7,225)
--------- --------- ---------
--------- --------- ---------
</TABLE>

Proceeds from voluntary sales of investments in bonds during 1995, 1994 and 1993
were $22.4 million, $17.9 million, and $13.2 million, respectively. Gross gains
of $4.3 million, $3.0 million, and $4.5 million and gross losses of $5.2
million, $4.6 million, and $ .5 million, respectively, were realized on those
sales.

NOTE 3 - FAIR VALUE DISCLOSURES OF FINANCIAL INFORMATION

Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments" requires disclosure of fair value information
about certain financial instruments (insurance contracts, real estate, goodwill
and taxes are excluded) for which it is practicable to estimate such values,
whether or not these instruments are included in the balance sheet. The fair
values presented for certain financial instruments are estimates which, in many
cases, may differ significantly from the amounts which could be recognized upon
immediate liquidation. In cases where market prices are not available,
estimates of fair value are based on discounted cash flow analyses which utilize
current interest rates for similar financial instruments which have comparable
terms and credit quality.

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments:

FINANCIAL ASSETS:

CASH AND SHORT TERM INVESTMENTS - The carrying amounts reported in the statement
of assets, liabilities, surplus and other funds approximate fair value.

BONDS - Fair values are based on quoted market prices, if available. If a
quoted market price is not available, fair values are estimated using
independent pricing sources or internally developed pricing models using
discounted cash flow analyses.

STOCKS - Fair values are based on quoted market prices, if available. If a
quoted market price is not available, fair values are estimated using
independent pricing sources or internally developed pricing models.

MORTGAGE LOANS - Fair values are estimated by discounting the future contractual
cash flows using the current rates at which similar loans would be made to
borrowers with similar credit ratings. The fair value of below investment grade
mortgage loans is limited to the lesser of the present value of the cash flows
or book value.

POLICY LOANS - The carrying amount reported in the statement of assets,
liabilities, surplus and other funds approximates fair value since policy loans
have no defined maturity dates and are inseparable from the insurance contracts.

FINANCIAL LIABILITIES:

ANNUITY AND OTHER FUND RESERVES (WITHOUT MORTALITY/MORBIDITY FEATURES) - Fair
values for the Company's liabilities under individual annuity contracts are
estimated based on current surrender values.

The estimated fair values of the financial instruments as of December 31 were as
follows:

<TABLE>
<CAPTION>
1995 1996
---- ----
Carrying Fair Carrying Fair
(In thousands) Value Value Value Value
----- ----- ----- -----
<S> <C> <C> <C> <C>
Financial Assets:
Cash $ 7,791 $ 7,791 $ 7,248 $ 7,248
Short term investments 3,500 3,500 45,239 45,239
Bonds 1,659,575 1,715,940 1,595,275 1,541,588
Stocks 18,132 18,414 12,283 12,590
Mortgage loans 239,522 250,196 295,532 291,704
Policy loans 122,696 122,696 116,600 116,600

Financial Liabilities:
Individual annuity contracts 803,099 797,024 869,230 862,662
Supplemental contracts without life
contingencies 16,796 16,796 16,673 16,673
Other contract deposit funds 632 632 1,105 1,105
</TABLE>
11

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

NOTE 4 - FEDERAL INCOME TAXES

The federal income tax provisions for 1995, 1994 and 1993 were $17.4 million,
$13.1 million and $8.6 million, respectively, which include taxes applicable to
realized capital gains of $.4 million, $1.0 million and $3.3 million.

The effective federal income tax rates were 27%, 67% and 30% in 1995, 1994 and
1993, respectively. The differences between the federal statutory rate and the
Company's effective tax rates are primarily related to decreases in taxable
income for the write-offs of mortgage loans; and increases in taxable income for
differences in policyholder liabilities for federal income tax purposes and
financial reporting purposes and the deferral of policy acquisition costs for
federal tax purposes.

The consolidated federal income tax returns are routinely audited by the
Internal Revenue Service (IRS) and provisions are routinely made in the
financial statements in anticipation of the results of these audits. The IRS
has completed its examination of all of the consolidated federal income tax
returns through 1988. In management's opinion, adequate tax liabilities have
been established for all years. However, the amount of these liabilities could
be revised in the near term if estimates of the Company's ultimate liability are
revised.

NOTE 5 - REINSURANCE

The Company participates in reinsurance to reduce overall risks, including
exposure to large losses and to permit recovery of a portion of direct losses.
Reinsurance contracts do not relieve the Company from its obligation to its
policyholders. Reinsurance financial data for the years ended December 31, is
as follows:

<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Reinsurance premiums assumed $ 3,442 $ 3,788 $ 4,190
Reinsurance premiums ceded
42,914 17,430 14,798
Deduction from insurance
liability including
reinsurance recoverable on
unpaid claims 82,227 46,734 42,805
</TABLE>

Individual life premiums ceded to First Allmerica aggregated $6.8 million, $7.8
million and $9.0 million in 1995, 1994 and 1993, respectively. The Company has
also entered into various reinsurance agreements with First Allmerica under
which certain insurance risks related to individual accident and health
business, premium income and related expenses are assumed by the Company from
First Allmerica. Premiums assumed pursuant to these agreements aggregated $3.4
million, $3.8 million and $4.2 million in 1995, 1994 and 1993, respectively .

During the year Allmerica Financial entered into a coinsurance agreement to
reinsure substantially all of its yearly renewable term life insurance.
Premiums ceded and reinsurance credits taken under this agreement amounted to
$25.4 million and $20.7 million, respectively. At December 31, 1995, the
deduction from insurance liability, including reinsurance recoverable on unpaid
claims under this agreement was $12.7 million.

NOTE 6 - ACCIDENT AND HEALTH POLICY AND CLAIM LIABILITIES

The Company regularly updates its estimates of policy and claims liabilities as
new information becomes available and further events occur which may impact the
resolution of unsettled claims for its accident and health line of business.
Changes in prior estimates are generally reflected in results of operations in
the year such changes are determined to be needed and recorded.

The policy and claims liabilities related to the Company's accident and health
business were $169.7 million and $123.5 million at December 31, 1995 and 1994,
respectively. Accident and health policy and claims liabilities have been
re-estimated for all prior years and were increased by $42.5 million, $10.9
million and $13.2 million, in 1995, 1994 and 1993, respectively, including $21.9
million and $2.8 million recorded as an adjustment to surplus in 1995 and 1993,
respectively. The unfavorable development is primarily due to reserve
strengthening and adverse experience in the Company's individual accident and
health line of business.

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

NOTE 7 - DIVIDEND RESTRICTIONS

Delaware has enacted laws governing the payment of dividends to stockholders by
insurers. These laws affect the dividend paying ability of the Company.
Pursuant to Delaware's statute, the maximum amount of dividends and other
distributions that an insurer may pay in any twelve month period, without the
prior approval of the Delaware Commissioner of Insurance, is limited to the
greater of (i) 10% of its statutory policyholder surplus as of the preceding
December 31 or (ii) the individual company's statutory net gain from operations
for the preceding calendar year (if such insurer is a life company) or its net
income (not including realized capital gains) for the preceding calendar year
(if such insurer is not a life company). Any dividends to be paid by an
insurer, whether or not in excess of the aforementioned threshold, from a source
other than statutory earned surplus would also require the prior approval of the
Delaware Commissioner of Insurance. At January 1, 1996, the Company could pay
dividends of $4.3 million to First Allmerica, without prior approval.

NOTE 8 - OTHER RELATED PARTY TRANSACTIONS

First Allmerica provides management, operating personnel and facilities on a
cost reimbursement basis to the Company. Expenses for services received from
First Allmerica were $ 85.8 million, $102.5 million and $98.9 million in 1995,
1994 and 1993, respectively. The net amounts payable to First Allmerica and
affiliates for accrued expenses and various other liabilities and receivables
were $12.6 million and $8.3 million at December 31, 1995 and 1994, respectively.

NOTE 9 - FUNDS ON DEPOSIT

In March 1994, the Company voluntarily withdrew from being licensed in New York.
In connection with the withdrawal First Allmerica, which is licensed in New
York, became qualified to sell the products previously sold by Allmerica
Financial in New York. The Company agreed with the New York Department of
Insurance to maintain, through a custodial account in New York, a security
deposit, the market value of which will at all times equal 102% of all
outstanding general account liabilities of the Company for New York
policyholders, claimants and creditors. As of December 31, 1995, the carrying
value and fair value of the assets or deposit was $295.0 million and $303.6
million, respectively, which is in excess of the required amount.

Additional securities with a carrying value of $4.2 million and $3.9 million
were on deposit with various other state and governmental authorities as of
December 31, 1995 and 1994, respectively.

NOTE 10 - LITIGATION

The Company has been named a defendant in various legal proceedings arising in
the normal course of business. In the opinion of management, based on the
advice of legal counsel, the ultimate resolution of these proceedings will not
have a material effect on the Company's financial statements.

<PAGE>

VEL ACCOUNT

STATEMENTS OF ASSETS AND LIABILITIES - DECEMBER 31, 1995

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
INVESTMENT
GROWTH GRADE INCOME MONEY MARKET EQUITY INDEX
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
1 2 3 4
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in shares of Allmerica
Investment Trust . . . . . . . . . . . . . . . . $ 35,491,036 $ 9,887,532 $ 6,152,803 $ 22,018,306
Receivable from Allmerica Financial Life
Insurance and Annuity Company (Sponsor). . . . . -- 20,456 -- 2,093
------------ ----------- ----------- ------------
Total assets . . . . . . . . . . . . . . . . . 35,491,036 9,907,988 6,152,803 22,020,399

LIABILITIES:
Payable to Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . . 34,320 -- 15,379 --
------------ ----------- ----------- ------------
Net assets . . . . . . . . . . . . . . . . . . $ 35,456,716 $ 9,907,988 $ 6,137,424 $ 22,020,399
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------

Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . $ 35,456,716 $ 9,907,988 $ 6,137,424 $ 11,167,565
Value of investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . -- -- -- 10,852,834
------------ ----------- ----------- ------------
$ 35,456,716 $ 9,907,988 $ 6,137,424 $ 22,020,399
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------

Units outstanding, December 31, 1995 . . . . . . . 11,110,145 5,013,545 4,166,830 10,317,464
Net asset value per unit, December 31, 1995. . . . $ 3.191382 $ 1.976244 $ 1.472924 $ 2.134284

- --------------------------------------------------------------------------------------------------------------------------
GOVERNMENT SELECT SELECT SELECT
BOND AGGRESSIVE GROWTH GROWTH GROWTH & INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
5 6 7 8
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in shares of Allmerica
Investment Trust . . . . . . . . . . . . . . . . $ 2,053,074 $ 14,397,222 $ 6,224,208 $ 6,495,624
Receivable from Allmerica Financial Life
Insurance and Annuity Company (Sponsor). . . . . 3,330 -- -- --
------------ ------------ ------------ ------------
Total assets . . . . . . . . . . . . . . . . . 2,056,404 14,397,222 6,224,208 6,495,624

LIABILITIES:
Payable to Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . . -- 16,212 2,127 3,875
------------ ------------ ------------ ------------
Net assets . . . . . . . . . . . . . . . . . . $ 2,056,404 $ 14,381,010 $ 6,222,081 $ 6,491,749
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . $ 2,056,404 $ 14,381,010 $ 6,222,081 $ 6,491,749
Value of investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . -- -- -- --
------------ ------------ ------------ ------------
$ 2,056,404 $ 14,381,010 $ 6,222,081 $ 6,491,749
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

Units outstanding, December 31, 1995 . . . . . . . 1,609,309 8,367,050 4,871,950 4,632,975
Net asset value per unit, December 31, 1995. . . . $ 1.277817 $ 1.718767 $ 1.277123 $ 1.401205

- ----------------------------------------------------------------------------------------------
SMALL CAP SELECT
VALUE INTERNATIONAL EQUITY
SUB-ACCOUNT SUB-ACCOUNT
9 11
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Investment in shares of Allmerica
Investment Trust . . . . . . . . . . . . . . . . $ 3,711,692 $ 2,141,148
Receivable from Allmerica Financial Life
Insurance and Annuity Company (Sponsor). . . . . 385 7,449
------------ ------------
Total assets . . . . . . . . . . . . . . . . . 3,712,077 2,148,597

LIABILITIES:
Payable to Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . . -- --
------------ ------------
Net assets . . . . . . . . . . . . . . . . . . $ 3,712,077 $ 2,148,597
------------ ------------
------------ ------------

Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . $ 3,712,077 $ 2,148,484
Value of investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . -- 113
------------ ------------
$ 3,712,077 $ 2,148,597
------------ ------------
------------ ------------

Units outstanding, December 31, 1995 . . . . . . . 2,965,953 1,888,933
Net asset value per unit, December 31, 1995. . . . $ 1.251563 $ 1.137405

</TABLE>

<PAGE>

VEL ACCOUNT

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SELECT VIPF VIPF VIPF
CAPITAL APPRECIATION MONEY MARKET HIGH INCOME EQUITY INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
12 101 102 103
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in shares of Allmerica Investment
Trust. . . . . . . . . . . . . . . . . . . . . . $ 1,285,175 -- -- --
Investment in shares of Fidelity Variable
Insurance Products Fund. . . . . . . . . . . . . -- $ 2,713,021 $ 9,269,478 $51,706,730
Investment in shares of T. Rowe Price
International Series, Inc. . . . . . . . . . . . -- -- -- --
Investment in shares of Delaware Group Premium
Fund, Inc. . . . . . . . . . . . . . . . . . . . -- -- -- --
Accrued investment income. . . . . . . . . . . . . -- 12,965 -- --
Receivable from Allmerica Financial Life
Insurance and Annuity Company (Sponsor). . . . . 1,994 -- -- --
----------- ------------ ----------- -----------
Total assets . . . . . . . . . . . . . . . . . 1,287,169 2,725,986 9,269,478 51,706,730

LIABILITIES:
Payable to Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . . -- 10,295 2,023 45,768
----------- ------------ ----------- -----------
Net assets . . . . . . . . . . . . . . . . . . $ 1,287,169 $ 2,715,691 $ 9,267,455 $51,660,962
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . $ 1,286,893 $ 2,715,691 $ 9,267,455 $51,660,962
Value of investment by
Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . 276 -- -- --
----------- ------------ ----------- -----------
$ 1,287,169 $ 2,715,691 $ 9,267,455 $51,660,962
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------

Units outstanding, December 31, 1995 . . . . . . . 927,805 1,821,076 3,957,334 16,161,717
Net asset value per unit, December 31, 1995. . . . $ 1.387327 $ 1.491256 $ 2.341843 $ 3.196502

<CAPTION>
- --------------------------------------------------------------------------------------------------------
VIPF VIPF VIPF II
GROWTH OVERSEAS ASSET MANAGER
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
104 105 106
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investment in shares of Allmerica Investment
Trust. . . . . . . . . . . . . . . . . . . . . . -- -- --
Investment in shares of Fidelity Variable
Insurance Products Fund. . . . . . . . . . . . . $ 52,466,391 $ 18,297,551 $ 1,254,648
Investment in shares of T. Rowe Price
International Series, Inc. . . . . . . . . . . . -- -- --
Investment in shares of Delaware Group Premium
Fund, Inc. . . . . . . . . . . . . . . . . . . . -- -- --
Accrued investment income. . . . . . . . . . . . . -- -- --
Receivable from Allmerica Financial Life -- -- --
Insurance and Annuity Company (Sponsor). . . . . ------------ ------------ ------------

Total assets . . . . . . . . . . . . . . . . . 52,466,391 18,297,551 1,254,648

LIABILITIES:
Payable to Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . . 57,057 25,088 1,404

Net assets . . . . . . . . . . . . . . . . . . $ 52,409,334 $ 18,272,463 $ 1,253,244
------------ ------------ ------------
------------ ------------ ------------
Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . $ 52,409,334 $ 18,272,463 $ 1,253,130
Value of investment by
Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . -- -- 114
------------ ------------ ------------
$ 52,409,334 $ 18,272,463 $ 1,253,244
------------ ------------ ------------
------------ ------------ ------------

Units outstanding, December 31, 1995 . . . . . . . 14,778,999 9,360,696 1,093,072
Net asset value per unit, December 31, 1995. . . . $ 3.546203 $ 1.952041 $ 1.146534

<CAPTION>
- ---------------------------------------------------------------------------------------------------
T. ROWE DGPF
INTERNATIONAL STOCK INTERNATIONAL EQUITY
SUB-ACCOUNT SUB-ACCOUNT
150 20
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Investment in shares of Allmerica Investment
Trust. . . . . . . . . . . . . . . . . . . . . . -- --
Investment in shares of Fidelity Variable
Insurance Products Fund. . . . . . . . . . . . . -- --
Investment in shares of T. Rowe Price
International Series, Inc. . . . . . . . . . . . $ 529,995 --
Investment in shares of Delaware Group Premium
Fund, Inc. . . . . . . . . . . . . . . . . . . . -- $ 3,562,181
Accrued investment income. . . . . . . . . . . . . -- --
Receivable from Allmerica Financial Life -- --
Insurance and Annuity Company (Sponsor). . . . . ------------ ------------

Total assets . . . . . . . . . . . . . . . . . 529,995 3,562,181

LIABILITIES:
Payable to Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . . 436 7,148

Net assets . . . . . . . . . . . . . . . . . . $ 529,559 $ 3,555,033
------------ ------------
------------ ------------
Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . $ 529,559 $ 3,555,033
Value of investment by
Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . -- --
------------ ------------
$ 529,559 $ 3,555,033
------------ ------------
------------ ------------

Units outstanding, December 31, 1995 . . . . . . . 502,768 2,719,640
Net asset value per unit, December 31, 1995. . . . $ 1.053287 $ 1.307170

</TABLE>

The accompanying notes are an integral part of these financial statements.

<PAGE>

VEL ACCOUNT

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
GROWTH
SUB-ACCOUNT 1
FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1993
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 3,398,296 $ 1,692,992 $ 2,541,777
EXPENSES:
Mortality and expense risk fees. . . . . . . . . . . . . 276,867 222,505 186,505
----------- ----------- -----------
Net investment income. . . . . . . . . . . . . . . . . . 3,121,429 1,470,487 2,355,272
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) . . . . . . . . . . . . . . . . 114,997 43,236 62,748
Net unrealized gain (loss) . . . . . . . . . . . . . . . 5,074,547 (1,707,945) (1,155,289)
----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . . . . . 5,189,544 (1,664,709) (1,092,541)
----------- ----------- -----------
Net increase (decrease) in net assets from
operations . . . . . . . . . . . . . . . . . . . . . . $ 8,310,973 $ (194,222) $ 1,262,731
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
INVESTMENT GRADE INCOME
SUB-ACCOUNT 2
FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1993
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 598,145 $ 503,268 $ 462,325
EXPENSES:
Mortality and expense risk fees. . . . . . . . . . . . . 80,882 72,076 54,091
----------- ----------- -----------
Net investment income. . . . . . . . . . . . . . . . . . 517,263 431,192 408,234
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) . . . . . . . . . . . . . . . . (8,055) (44,126) 24,379
Net unrealized gain (loss) . . . . . . . . . . . . . . . 867,289 (710,225) 63,392
----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . . . . . 859,234 (754,351) 87,771
----------- ----------- -----------
Net increase (decrease) in net assets from
operations . . . . . . . . . . . . . . . . . . . . . . $ 1,376,497 $ (323,159) $ 496,005
----------- ----------- -----------
----------- ----------- -----------

- -----------------------------------------------------------------------------------------------------------
MONEY MARKET
SUB-ACCOUNT 3
FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1993
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 340,880 $ 235,657 $ 240,882
EXPENSES:
Mortality and expense risk fees. . . . . . . . . . . . . 54,030 55,533 73,668
----------- ----------- -----------
Net investment income. . . . . . . . . . . . . . . . . . 286,850 180,124 167,214
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) . . . . . . . . . . . . . . . . -- -- --
Net unrealized gain (loss) . . . . . . . . . . . . . . . -- -- --
----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . . . . . -- -- --
----------- ----------- -----------
Net increase (decrease) in net assets from
operations . . . . . . . . . . . . . . . . . . . . . . $ 286,850 $ 180,124 $ 167,214
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

<PAGE>

VEL ACCOUNT

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
EQUITY INDEX
SUB-ACCOUNT 4
FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1993
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 1,616,618 $ 529,861 $ 351,244
EXPENSES:
Mortality and expense risk fees. . . . . . . . . . . . . 168,665 135,800 121,238
----------- ----------- -----------
Net investment income (loss) . . . . . . . . . . . . . . 1,447,953 394,061 230,006
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) . . . . . . . . . . . . . . . . 98,943 139,128 91,635
Net unrealized gain (loss) . . . . . . . . . . . . . . . 3,975,325 (506,142) 769,721
----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . . . . . 4,074,268 (367,014) 861,356
----------- ----------- -----------
Net increase (decrease) in net assets from
operations . . . . . . . . . . . . . . . . . . . . . . $ 5,522,221 $ 27,047 $ 1,091,362
----------- ----------- -----------
----------- ----------- -----------

<CAPTION>
- -------------------------------------------------------------------------------------------------------------
GOVERNMENT BOND
SUB-ACCOUNT 5
FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1993
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 122,508 $ 183,079 $ 176,133
EXPENSES:
Mortality and expense risk fees. . . . . . . . . . . . . 18,980 29,934 24,703
---------- ---------- ----------
Net investment income (loss) . . . . . . . . . . . . . . 103,528 153,145 151,430
---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) . . . . . . . . . . . . . . . . (27,790) (127,304) 21,728
Net unrealized gain (loss) . . . . . . . . . . . . . . . 162,592 (98,119) (46,648)
---------- ---------- ----------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . . . 134,802 (225,423) (24,920)
---------- ---------- ----------
Net increase (decrease) in net assets from
operations . . . . . . . . . . . . . . . . . . . . . . . $ 238,330 $ (72,278) $ 126,510
---------- ---------- ----------
---------- ---------- ----------

- -------------------------------------------------------------------------------------------------------------
SELECT AGGRESSIVE GROWTH
SUB-ACCOUNT 6
FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1993
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . -- -- $ 2,603
EXPENSES:
Mortality and expense risk fees. . . . . . . . . . . . . $ 107,755 $ 68,536 30,400
---------- ---------- ----------
Net investment income (loss) . . . . . . . . . . . . . . (107,755) (68,536) (27,797)
---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) . . . . . . . . . . . . . . . . 110,726 16,672 17,854
Net unrealized gain (loss) . . . . . . . . . . . . . . . 3,205,669 (222,557) 526,828
---------- ---------- ----------
Net realized and unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . . . 3,316,395 (205,885) 544,682
---------- ---------- ----------
Net increase (decrease) in net assets from
operations . . . . . . . . . . . . . . . . . . . . . . . $3,208,640 $ (274,421) $ 516,885
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

The accompanying notes are an integral part of these financial statements.

<PAGE>

VEL ACCOUNT

STATEMENTS OF OPERATIONS, CONTINUED

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
SELECT GROWTH
SUB-ACCOUNT 7
FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1993
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 909 $ 13,907 $ 3,164
EXPENSES:
Mortality and expense risk fees. . . . . . . . . . . . . 50,997 36,095 21,156
----------- ----------- -----------
Net investment income (loss) . . . . . . . . . . . . . . (50,088) (22,188) (17,992)
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) . . . . . . . . . . . . . . . . 67,387 15,084 6,496
Net unrealized gain (loss) . . . . . . . . . . . . . . . 1,114,016 (87,571) 129,285
----------- ----------- -----------
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . . 1,181,403 (72,487) 135,781
----------- ----------- -----------
Net increase (decrease) in net assets from
operations . . . . . . . . . . . . . . . . . . . . . . $ 1,131,315 $ (94,675) $ 117,789
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
SELECT GROWTH AND INCOME
SUB-ACCOUNT 8
FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1993
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 332,182 $ 209,665 $ 55,456
EXPENSES:
Mortality and expense risk fees. . . . . . . . . . . . . 48,963 37,644 18,449
----------- ----------- -----------
Net investment income (loss) . . . . . . . . . . . . . . 283,219 172,021 37,007
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) . . . . . . . . . . . . . . . . 68,712 10,373 13,845
Net unrealized gain (loss) . . . . . . . . . . . . . . . 1,034,046 (196,007) 130,713
----------- ----------- -----------
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . . 1,102,758 (185,634) 144,558
----------- ----------- -----------
Net increase (decrease) in net assets from
operations . . . . . . . . . . . . . . . . . . . . . . $ 1,385,977 $ (13,613) $ 181,565
----------- ----------- -----------
----------- ----------- -----------

<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE
SUB-ACCOUNT 9
FOR THE YEAR ENDED DECEMBER 31, FOR THE PERIOD
1995 1994 7/14/93* TO 12/31/93
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 123,752 $ 11,138 $ 6,884
EXPENSES:
Mortality and expense risk fees. . . . . . . . . . . . . 28,223 15,883 1,303
----------- ----------- -----------
Net investment income (loss) . . . . . . . . . . . . . . 95,529 (4,745) 5,581
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) . . . . . . . . . . . . . . . . 35,178 (1,911) 439
Net unrealized gain (loss) . . . . . . . . . . . . . . . 350,342 (138,299) 76,068
----------- ----------- -----------
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . . 385,520 (140,210) 76,507
----------- ----------- -----------
Net increase (decrease) in net assets from
operations . . . . . . . . . . . . . . . . . . . . . . $ 481,049 $ (144,955) $ 82,088
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

<PAGE>

VEL ACCOUNT

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
SELECT INTERNATIONAL EQUITY SELECT CAPITAL APPRECIATION
SUB-ACCOUNT 11 SUB-ACCOUNT 12
FOR THE YEAR ENDED FOR THE PERIOD FOR THE PERIOD
12/31/95 5/4/94* TO 12/31/94 4/28/95* TO 12/31/95
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 28,461 $ 1,381 $ 24,495
EXPENSES:
Mortality and expense risk fees. . . . . . . . . . . . . 11,453 1,484 3,057
---------- ---------- ----------
Net investment income (loss) . . . . . . . . . . . . . . 17,008 (103) 21,438
---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) . . . . . . . . . . . . . . . . 3,984 (142) 1,577
Net unrealized gain (loss) . . . . . . . . . . . . . . . 187,492 (20,162) 106,054
---------- ---------- ----------
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . . 191,476 (20,304) 107,631
---------- ---------- ----------
Net increase (decrease) in net assets from
operations . . . . . . . . . . . . . . . . . . . . . . $ 208,484 $ (20,407) $ 129,069
---------- ---------- ----------
---------- ---------- ----------
<CAPTION>
- ----------------------------------------------------------------------------------------------------
VIPF MONEY MARKET
SUB-ACCOUNT 101
FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1993
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 156,906 $ 113,645 $ 82,206
EXPENSES:
Mortality and expense risk fees. . . . . . . . . . . . . 24,582 24,557 23,168
---------- ---------- ----------
Net investment income (loss) . . . . . . . . . . . . . . 132,324 89,088 59,038
---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) . . . . . . . . . . . . . . . . -- -- --
Net unrealized gain (loss) . . . . . . . . . . . . . . . -- -- --
---------- ---------- ----------
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . . -- -- --
---------- ---------- ----------
Net increase (decrease) in net assets from
operations . . . . . . . . . . . . . . . . . . . . . . $ 132,324 $ 89,088 $ 59,038
---------- ---------- ----------
---------- ---------- ----------

<CAPTION>
- ---------------------------------------------------------------------------------------------------------
VIPF HIGH INCOME
SUB-ACCOUNT 102
FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1993
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 527,909 $ 595,097 $ 308,170
EXPENSES:
Mortality and expense risk fees. . . . . . . . . . . . . 75,188 62,457 43,221
---------- ---------- ----------
Net investment income (loss) . . . . . . . . . . . . . . 452,721 532,640 264,949
---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) . . . . . . . . . . . . . . . . 65,770 54,603 85,471
Net unrealized gain (loss) . . . . . . . . . . . . . . . 936,558 (764,492) 497,807
---------- ---------- ----------
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . . 1,002,328 (709,889) 583,278
---------- ---------- ----------
Net increase (decrease) in net assets from
operations . . . . . . . . . . . . . . . . . . . . . . $1,455,049 $ (177,249) $ 848,227
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

* Date of initial investment.

The accompanying notes are an integral part of these financial statements.

<PAGE>

VEL ACCOUNT

STATEMENTS OF OPERATIONS, Continued

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
VIPF EQUITY INCOME
SUB-ACCOUNT 103
FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . $ 2,886,679 $ 2,322,480 $ 663,826
EXPENSES:
Mortality and expense risk fees. . . . . . . . . . 395,590 296,761 221,537
------------- ------------- -------------
Net investment income (loss) . . . . . . . . . . . 2,491,089 2,025,719 442,289
------------- ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain . . . . . . . . . . . . . . . . 359,460 142,856 96,966
Net unrealized gain (loss) . . . . . . . . . . . . 9,834,460 (231,521) 3,183,292
------------- ------------- -------------
Net realized and unrealized gain (loss) on investments 10,193,920 (88,665) 3,280,258
------------- ------------- -------------
Net increase (decrease) in net assets from operations $ 12,685,009 $ 1,937,054 $ 3,722,547
------------- ------------- -------------
------------- ------------- -------------

<CAPTION>
- -----------------------------------------------------------------------------------------------------------
VIPF GROWTH
SUB-ACCOUNT 104
FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1993
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . $ 210,037 $ 2,037,179 $ 502,841
EXPENSES:
Mortality and expense risk fees. . . . . . . . . . . . 424,764 311,684 245,956
------------ ------------ ------------
Net investment income (loss) . . . . . . . . . . . . . (214,727) 1,725,495 256,885
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain . . . . . . . . . . . . . . . . . . 789,394 205,961 189,576
Net unrealized gain (loss) . . . . . . . . . . . . . . 12,592,041 (2,127,245) 4,117,186
------------ ------------ ------------
Net realized and unrealized gain (loss) on investments . 13,381,435 (1,921,284) 4,306,762
------------ ------------ ------------
Net increase (decrease) in net assets from operations . $ 13,166,708 $ (195,789) $ 4,563,647
------------ ------------ ------------
------------ ------------ ------------

<CAPTION>
- -----------------------------------------------------------------------------------------------------------
VIPF OVERSEAS
SUB-ACCOUNT 105
FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1993
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . $ 129,738 $ 69,245 $ 151,147
EXPENSES:
Mortality and expense risk fees. . . . . . . . . . . . 159,261 141,965 81,146
------------ ------------ ------------
Net investment income (loss) . . . . . . . . . . . . . (29,523) (72,720) 70,001
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain . . . . . . . . . . . . . . . . . . 304,440 168,454 32,570
Net unrealized gain (loss) . . . . . . . . . . . . . . 1,219,736 (120,715) 2,529,324
------------ ------------ ------------
Net realized and unrealized gain (loss) on investments . 1,524,176 47,739 2,561,894
------------ ------------ ------------
Net increase (decrease) in net assets from operations . $ 1,494,653 $ (24,981) $ 2,631,895
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

<PAGE>

VEL ACCOUNT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
VIPF II ASSET MANAGER T. ROWE INTERNATIONAL STOCK
SUB-ACCOUNT 106 SUB-ACCOUNT 150
FOR THE YEAR ENDED FOR THE PERIOD FOR THE PERIOD
12/31/95 5/4/94* TO 12/31/94 6/23/95* TO 12/31/95
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . $ 21,513 $ 421 --
EXPENSES:
Mortality and expense risk fees. . . . . . . . . . . . 10,599 2,688 $ 1,301
------------ ------------ ------------
Net investment income (loss) . . . . . . . . . . . . . 10,914 (2,267) (1,301)
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain(loss). . . . . . . . . . . . . . . . 13,540 124 (98)
Net unrealized gain (loss) . . . . . . . . . . . . . . 154,558 (21,891) 15,909
------------ ------------ ------------
Net realized and unrealized gain (loss) on investments 168,098 (21,767) 15,811
------------ ------------ ------------
Net increase (decrease) in net assets from operations. $ 179,012 $ (24,034) $ 14,510
------------ ------------ ------------
------------ ------------ ------------

- ----------------------------------------------------------------------------------------------------------------------
DGPF INTERNATIONAL EQUITY
SUB-ACCOUNT 207
FOR THE YEAR ENDED DECEMBER 31, FOR THE PERIOD
1995 1994 7/15/93* TO 12/31/93
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 75,738 $ 7,466 --
EXPENSES:
Mortality and expense risk fees. . . . . . . . . . . . . 28,475 16,641 $ 663
------------ ------------ ------------
Net investment income (loss) . . . . . . . . . . . . . . 47,263 (9,175) (663)
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain(loss). . . . . . . . . . . . . . . . . 18,892 11,520 914
Net unrealized gain (loss) . . . . . . . . . . . . . . . 320,817 (15,611) 66,886
------------ ------------ ------------
Net realized and unrealized gain (loss) on investments . 339,709 (4,091) 67,800
------------ ------------ ------------
Net increase (decrease) in net assets from operations . $ 386,972 $ (13,266) $ 67,137
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

* Date of initial investment.

The accompanying notes are an integral part of these financial statements.

<PAGE>

VEL ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
GROWTH INVESTMENT GRADE INCOME
SUB-ACCOUNT 1 SUB-ACCOUNT 2
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1995 1994 1993 1995 1994 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income . . . . . . $ 3,121,429 $ 1,470,487 $ 2,355,272 $ 517,263 $ 431,192 $ 408,234
Net realized gain (loss)
from security transactions. . . . 114,997 43,236 62,748 (8,055) (44,126) 24,379
Net unrealized gain (loss) on
investments . . . . . . . . . . . 5,074,547 (1,707,945) (1,155,289) 867,289 (710,225) 63,392
----------- ----------- ----------- ---------- ----------- ----------
Net increase (decrease) in
net assets from operations. . . . 8,310,973 (194,222) 1,262,731 1,376,497 (323,159) 496,005
----------- ----------- ----------- ---------- ----------- ----------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . 5,348,444 6,198,543 7,695,003 1,777,991 2,301,855 2,795,176
Terminations . . . . . . . . . . . (962,528) (746,445) (522,595) (315,011) (276,756) (178,939)
Other transfers from (to) the
General Account of Allmerica
Financial Life Insurance and
Annuity Company (Sponsor) . . . . (2,848,977) (4,055,993) (846,590) (974,910) (1,566,287) 535,441
----------- ----------- ----------- ---------- ----------- ----------
Net increase (decrease) in net
assets from capital transactions. 1,536,939 1,396,105 6,325,818 488,070 458,812 3,151,678
----------- ----------- ----------- ---------- ----------- ----------
Net increase (decrease) in net
assets. . . . . . . . . . . . . . 9,847,912 1,201,883 7,588,549 1,864,567 135,653 3,647,683

NET ASSETS
Beginning of year . . . . . . . . . 25,608,804 24,406,921 16,818,372 8,043,421 7,907,768 4,260,085
----------- ----------- ----------- ---------- ----------- ----------
End of year . . . . . . . . . . . . $35,456,716 $25,608,804 $24,406,921 $9,907,988 $ 8,043,421 $7,907,768
----------- ----------- ----------- ---------- ----------- ----------
----------- ----------- ----------- ---------- ----------- ----------

VEL ACCOUNT

<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET EQUITY INDEX
SUB-ACCOUNT 3 SUB-ACCOUNT 4
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1995 1994 1993 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income . . . . . . $ 286,850 $ 180,124 $ 167,214 $ 1,447,953 $ 394,061 $ 230,006
Net realized gain (loss)
from security transactions. . . . - - - 98,943 139,128 91,635
Net unrealized gain (loss) on
investments . . . . . . . . . . . - - - 3,975,325 (506,142) 769,721
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in
net assets from operations. . . . 286,850 180,124 167,214 5,522,221 27,047 1,091,362
----------- ----------- ----------- ----------- ----------- -----------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . 3,733,510 4,928,805 8,074,333 1,721,701 1,921,153 2,378,594
Terminations . . . . . . . . . . . (337,981) (154,224) (197,852) (251,519) (220,185) (115,525)
Other transfers from (to) the
General Account of Allmerica
Financial Life Insurance and
Annuity Company (Sponsor). . . . (3,371,022) (5,809,702) (9,901,914) (319,428) (1,226,276) (122,197)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net
assets from capital transactions. 24,507 (1,034,591) (2,025,433) 1,150,754 474,692 2,140,872
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net
assets. . . . . . . . . . . . . . 311,357 (854,467) (1,858,219) 6,672,975 501,739 3,232,234

NET ASSETS
Beginning of year . . . . . . . . . 5,826,067 6,680,534 8,538,753 15,347,424 14,845,685 11,613,451
----------- ----------- ----------- ----------- ----------- -----------
End of year . . . . . . . . . . . . $ 6,137,424 $ 5,826,067 $ 6,680,534 $22,020,399 $15,347,424 $14,845,685
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------

<CAPTION>
- ------------------------------------------------------------------------------------
GOVERNMENT BOND
SUB-ACCOUNT 5
YEAR ENDED DECEMBER 31,
1995 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income . . . . . . $ 103,528 $ 153,145 $ 151,430
Net realized gain (loss)
from security transactions. . . . (27,790) (127,304) 21,728
Net unrealized gain (loss) on
investments . . . . . . . . . . . 162,592 (98,119) (46,648)
----------- ----------- -----------
Net increase (decrease) in
net assets from operations. . . . 238,330 (72,278) 126,510
----------- ----------- -----------

Net premiums . . . . . . . . . . . 1,087,763 2,156,088 3,637,440
Terminations . . . . . . . . . . . (224,574) (39,422) (19,683)
Other transfers from (to) the
General Account of Allmerica
Financial Life Insurance and
Annuity Company (Sponsor) . . . . (1,337,123) (3,997,857) (463,785)
----------- ----------- -----------
Net increase (decrease) in net
assets from capital transactions. (473,934) (1,881,191) 3,153,972
----------- ----------- -----------
Net increase (decrease) in net
assets . . . . . . . . . . . . . (235,604) (1,953,469) 3,280,482

NET ASSETS
Beginning of year . . . . . . . . . 2,292,008 4,245,477 964,995
----------- ----------- -----------
End of year . . . . . . . . . . . . 2,056,404 $ 2,292,008 $ 4,245,477
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

<PAGE>

VEL ACCOUNT

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
SELECT AGGRESSIVE GROWTH SELECT GROWTH
SUB-ACCOUNT 6 SUB-ACCOUNT 7
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1995 1994 1993 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) . . . $ (107,755) $ (68,536) $ (27,797) $ (50,088) $ (22,188) $ (17,992)
Net realized gain (loss)
from security transactions. . . . 110,726 16,672 17,854 67,387 15,084 6,496
Net unrealized gain (loss) on
investments . . . . . . . . . . . 3,205,669 (222,557) 526,828 1,114,016 (87,571) 129,285
----------- ---------- ---------- ---------- ---------- ----------

Net increase (decrease) in
net assets from operations . . . 3,208,640 (274,421) 516,885 1,131,315 (94,675) 117,789
----------- ---------- ---------- ---------- ---------- ----------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . 2,791,210 3,158,118 2,536,127 1,207,487 1,506,265 1,840,520
Terminations . . . . . . . . . . . (332,835) (217,838) (53,410) (185,136) (67,997) (22,271)
Other transfers from (to)
the General Account of Allmerica
Financial Life Insurance and
Annuity Company (Sponsor) . . . . (703,235) 967,628 1,888,397 (535,607) (517,387) 1,396,582
Net increase in net assets from
investment by Allmerica
Financial Life Insurance and
Annuity Company (Sponsor). . . . - - - - - -
----------- ---------- ---------- ---------- ---------- ----------
Net increase in net assets from
capital transactions . . . . . . 1,755,140 3,907,908 4,371,114 486,744 920,881 3,214,831
----------- ---------- ---------- ---------- ---------- ----------
Net increase in net assets . . . . 4,963,780 3,633,487 4,887,999 1,618,059 826,206 3,332,620

NET ASSETS:
Beginning of year. . . . . . . . . 9,417,230 5,783,743 895,744 4,604,022 3,777,816 445,196
----------- ----------- ---------- ---------- ---------- ----------
End of year . . . . . . . . . . . $14,381,010 $9,417,230 $5,783,743 $6,222,081 $4,604,022 $3,777,816
----------- ---------- ---------- ---------- ---------- ----------
----------- ---------- ---------- ---------- ---------- ----------

<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
SELECT
GROWTH AND INCOME SMALL CAP VALUE
SUB-ACCOUNT 8 SUB-ACCOUNT 9
YEAR ENDED DECEMBER 31, YEAR ENDED PERIOD FROM
1995 1994 1993 12/31/95 12/31/94 7/14/93* TO 12/31/93
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) . . . $ 283,219 $ 172,021 $ 37,007 $ 95,529 $ (4,745) $ 5,581
Net realized gain (loss)
from security transactions. . . . 68,712 10,373 13,845 35,178 (1,911) 439
Net unrealized gain (loss) on
investments . . . . . . . . . . . 1,034,046 (196,007) 130,713 350,342 (138,299) 76,068
---------- ---------- ---------- ---------- ---------- --------

Net increase (decrease) in
net assets from operations . . . 1,385,977 (13,613) 181,565 481,049 (144,955) 82,088
---------- ---------- ---------- ---------- ---------- --------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . 1,173,049 1,435,394 1,725,282 728,709 768,133 261,242
Terminations . . . . . . . . . . . (161,150) (102,727) (11,156) (66,720) (15,056) (1,584)
Other transfers from (to)
the General Account of Allmerica
Financial Life Insurance and
Annuity Company (Sponsor) . . . . (567,886) (56,409) 1,048,809 38,711 977,932 602,528
Net increase in net assets from
investment by Allmerica
Financial Life Insurance and
Annuity Company (Sponsor). . . . - - - - - -
---------- ---------- ---------- ---------- ---------- --------
Net increase in net assets from
capital transactions . . . . . . 444,013 1,276,258 2,762,935 700,700 1,731,009 862,186
---------- ---------- ---------- ---------- ---------- --------
Net increase in net assets . . . . 1,829,990 1,262,645 2,944,500 1,181,749 1,586,054 944,274

NET ASSETS:
Beginning of period . . . . . . . 4,661,759 3,399,114 454,614 2,530,328 944,274 -
---------- ---------- ---------- ---------- ---------- --------
End of period . . . . . . . . . . $6,491,749 $4,661,759 $3,399,114 $3,712,077 $2,530,328 $944,274
---------- ---------- ---------- ---------- ---------- --------
---------- ---------- ---------- ---------- ---------- --------

<CAPTION>
- --------------------------------------------------------------------------------------
SELECT
INTERNATIONAL EQUITY
SUB-ACCOUNT 11
YEAR ENDED PERIOD FROM
12/31/95 5/4/94* TO 12/31/94
- -------------------------------------------------------------------------------------
<S>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) . . . $ 17,008 $ (103)
Net realized gain (loss)
from security transactions. . . . 3,984 (142)
Net unrealized gain (loss) on
investments . . . . . . . . . . . 187,492 (20,162)
--------- --------

Net increase (decrease) in
net assets from operations . . . 208,484 (20,407)
--------- --------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . 370,401 179,090
Terminations . . . . . . . . . . . (16,371) (6,006)
Other transfers from (to)
the General Account of Allmerica
Financial Life Insurance and
Annuity Company (Sponsor) . . . . 942,142 491,164
Net increase in net assets from
investment by Allmerica
Financial Life Insurance and
Annuity Company (Sponsor). . . . - 100
---------- --------
Net increase in net assets from
capital transactions . . . . . . 1,296,172 664,348
---------- --------
Net increase in net assets . . . . 1,504,656 643,941

NET ASSETS:
Beginning of period . . . . . . . 643,941 -
---------- --------
End of period . . . . . . . . . . $2,148,597 $643,941
---------- --------
---------- --------
</TABLE>

* Date of initial investment.

The accompanying notes are an integral part of these financial statements.

<PAGE>

VEL ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS, Continued

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
SELECT CAPITAL APPRECIATION VIPF MONEY MARKET
SUB-ACCOUNT 12 SUB-ACCOUNT 101
PERIOD FROM YEAR ENDED DECEMBER 31,
4/28/95 TO 12/31/95 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) . . . $ 21,438 $ 132,324 $ 89,088 $ 59,038
Net realized gain
from security transactions . . . 1,577 -- -- --
Net unrealized gain (loss)
on investments. . . . . . . . . . 106,054 -- -- --
---------- ---------- ----------- -----------
Net increase (decrease) in net
assets from operations . . . . . 129,069 132,324 89,088 59,038
---------- ---------- ----------- -----------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . 139,022 810,746 1,070,685 1,251,523
Terminations . . . . . . . . . . . (2,350) (122,754) (89,552) (84,920)
Other transfers from (to) the
General Account of Allmerica
Financial Life Insurance and
Annuity Company (Sponsor) . . . . 1,021,228 (670,796) (1,127,373) (1,145,805)
Net increase in net assets from
investment by Allmerica
Financial Life Insurance and
Annuity Company (Sponsor) . . . . 200 -- -- --
---------- ---------- ----------- -----------
Net increase (decrease) in net
assets from capital
transactions. . . . . . . . . . . 1,158,100 17,196 (146,240) 20,798
---------- ---------- ----------- -----------
Net increase (decrease) in net
assets . . . . . . . . . . . . . 1,287,169 149,520 (57,152) 79,836

NET ASSETS:
Beginning of period . . . . . . - 2,566,171 2,623,324 2,543,488
---------- ---------- ----------- -----------
End of period . . . . . . . . . $1,287,169 $2,715,691 $ 2,566,172 $ 2,623,324
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------

<CAPTION>
- -------------------------------------------------------------------------------------
VIPF HIGH INCOME
SUB-ACCOUNT 102
YEAR ENDED DECEMBER 31,
1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) . . . $ 452,721 $ 532,640 $ 264,949
Net realized gain
from security transactions . . . 65,770 54,603 85,471
Net unrealized gain (loss)
on investments. . . . . . . . . . 936,558 (764,492) 497,807
---------- ---------- ----------
Net increase (decrease) in net
assets from operations . . . . . 1,455,049 (177,249) 848,227
---------- ---------- ----------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . 1,606,889 1,750,959 1,641,975
Terminations . . . . . . . . . . . (460,673) (265,758) (196,630)
Other transfers from (to) the
General Account of Allmerica
Financial Life Insurance and
Annuity Company (Sponsor) . . . . (525,638) (398,451) 404,368
Net increase in net assets from
investment by Allmerica
Financial Life Insurance and
Annuity Company (Sponsor) . . . . -- -- --
---------- ---------- ----------
Net increase (decrease) in net
assets from capital
transactions. . . . . . . . . . . 620,578 1,086,750 1,849,713
---------- ---------- ----------
Net increase (decrease) in net
assets . . . . . . . . . . . . . 2,075,627 909,501 2,697,940

NET ASSETS:
Beginning of year. . . . . . . . 7,191,828 6,282,327 3,584,387
---------- ---------- ----------
End of year. . . . . . . . . . . $9,267,455 $7,191,828 $6,282,327
---------- ---------- ----------
---------- ---------- ----------

<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
VIPF EQUITY INCOME VIPF GROWTH
SUB-ACCOUNT 103 SUB-ACCOUNT 104
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1995 1994 1993 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) . . . $ 2,491,089 $ 2,025,719 $ 442,289 $ (214,727) $ 1,725,495 $ 256,885
Net realized gain
from security transactions . . . 359,460 142,856 96,966 789,394 205,961 189,576
Net unrealized gain (loss)
on investments. . . . . . . . . . 9,834,460 (231,521) 3,183,292 12,592,041 (2,127,245) 4,117,186
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net
assets from operations . . . . . 12,685,009 1,937,054 3,722,547 13,166,708 (195,789) 4,563,647
----------- ----------- ----------- ----------- ----------- -----------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . 6,706,020 7,271,670 7,274,768 7,347,859 8,139,087 8,163,457
Terminations . . . . . . . . . . . (1,591,639) (1,104,770) (999,349) (2,006,847) (1,203,773) (956,029)
Other transfers from (to) the
General Account of Allmerica
Financial Life Insurance and
Annuity Company (Sponsor) . . . . (2,204,684) (1,533,560) (177,231) (3,680,153) (2,222,672) (623,455)
Net increase in net assets from
investment by Allmerica
Financial Life Insurance and
Annuity Company (Sponsor) . . . . -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net
assets from capital
transactions. . . . . . . . . . . 2,909,697 4,633,340 6,098,188 1,660,859 4,712,642 6,583,973
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net
assets . . . . . . . . . . . . . 15,594,706 6,570,394 9,820,735 14,827,567 4,516,853 11,147,620

NET ASSETS:
Beginning of year. . . . . . . . 36,066,256 29,495,862 19,675,127 37,581,767 33,064,914 21,917,294
----------- ----------- ----------- ----------- ----------- -----------
End of year. . . . . . . . . . . $51,660,962 $36,066,256 $29,495,862 $52,409,334 $37,581,767 $33,064,914
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------

</TABLE>

* Date of initial investment.

The accompanying notes are an integral part of these financial statements.

<PAGE>

VEL ACCOUNT

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
VIPF
OVERSEAS
SUB-ACCOUNT 105
YEAR ENDED DECEMBER 31,
1995 1994 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income (loss) . . . . . . . . $ (29,523) $ (72,720) $ 70,001
Net realized gain (loss)
from security transactions. . . . . . . . . 304,440 168,454 32,570
Net unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . 1,219,736 (120,715) 2,529,324
----------- ----------- ----------
Net increase (decrease) in net assets
from operations . . . . . . . . . . . . . . 1,494,653 (24,981) 2,631,895
----------- ----------- ----------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . . . . . . 3,368,247 3,985,517 3,072,742
Terminations . . . . . . . . . . . . . . . . (687,516) (488,309) (356,734)
Other transfers from (to) the
General Account of Allmerica
Financial Life Insurance and
Annuity Company (Sponsor) . . . . . . . . . (2,809,853) 719,983 1,032,634

Net increase in net assets from investment
by Allmerica Financial Life Insurance
and Annuity Company (Sponsor) . . . . . . . -- -- --
----------- ----------- ----------
Net increase (decrease) in net assets
from capital transactions . . . . . . . . . (129,122) 4,217,191 3,748,642
----------- ----------- ----------
Net increase (decrease) in net assets 1,365,531 4,192,210 6,380,537
NET ASSETS:
Beginning of year. . . . . . . . . . . . . . 16,906,932 12,714,722 6,334,185
----------- ----------- ----------
End of year. . . . . . . . . . . . . . . . . $18,272,463 $16,906,932 $12,714,722
----------- ----------- ----------
----------- ----------- ----------

<CAPTION>
- ----------------------------------------------------------------------------------------------------------
VIPF II
ASSET MANAGER
SUB ACCOUNT 106
YEAR ENDED DECEMBER 31, PERIOD FROM
1995 5/6/94* TO 12/31/94
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income (loss) . . . . . . . . $ 10,914 $ (2,267)
Net realized gain (loss)
from security transactions. . . . . . . . . 13,540 124
Net unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . 154,558 (21,891)
---------- --------
Net increase (decrease) in net assets
from operations . . . . . . . . . . . . . . 179,012 (24,034)
---------- --------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . . . . . . 258,611 224,497
Terminations . . . . . . . . . . . . . . . . (19,023) (1,887)
Other transfers from (to) the
General Account of Allmerica
Financial Life Insurance and
Annuity Company (Sponsor) . . . . . . . . . (47,087) 683,055
Net increase in net assets from investment
by Allmerica Financial Life Insurance
and Annuity Company (Sponsor) . . . . . . . -- 100
---------- --------
Net increase (decrease) in net assets
from capital transactions . . . . . . . . . 192,501 905,765
---------- --------
Net increase (decrease) in net assets

NET ASSETS:
Beginning of period . . . . . . . . . . . . 371,513 881,731
End of period . . . . . . . . . . . . . . . 881,731 --
---------- --------
$1,253,244 $881,731
---------- --------
---------- --------

<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
T. ROWE DGPF
INTERNATIONAL STOCK INTERNATIONAL EQUITY
SUB-ACCOUNT 150 SUB-ACCOUNT 207
PERIOD FROM YEAR ENDED DECEMBER 31, PERIOD FROM
6/23/95* to 12/31/95 1995 1994 7/15/93* to 12/31/93
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income (loss) . . . . . . . . $ (1,301) $ 47,263 $ (9,175) $ (663)
Net realized gain (loss)
from security transactions. . . . . . . . . (98) 18,892 11,520 914
Net unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . 15,909 320,817 (15,611) 66,886
-------- ---------- ---------- --------
Net increase (decrease) in net assets
from operations . . . . . . . . . . . . . . 14,510 386,972 (13,266) 67,137
-------- ---------- ---------- --------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . . . . . . 42,650 788,037 727,371 269,798
Terminations . . . . . . . . . . . . . . . . (453) (60,216) (36,179) (542)
Other transfers from (to) the
General Account of Allmerica
Financial Life Insurance and
Annuity Company (Sponsor) . . . . . . . . . 472,852 (205,595) 1,016,545 614,971
Net increase in net assets from investment
by Allmerica Financial Life Insurance
and Annuity Company (Sponsor) . . . . . . . -- -- -- --
-------- ---------- ---------- --------
Net increase (decrease) in net assets
from capital transactions . . . . . . . . . 515,049 522,226 1,707,737 884,227
-------- ---------- ---------- --------
Net increase (decrease) in net assets 529,559 909,198 1,694,471 951,364

NET ASSETS:
Beginning of period . . . . . . . . . . . . - 2,645,835 951,364 --
End of period . . . . . . . . . . . . . . .
$529,559 $3,555,033 $2,645,835 $951,364
-------- ---------- ---------- --------
-------- ---------- ---------- --------
</TABLE>

* Date of initial investment.

The accompanying notes are an integral part of these financial statements.

<PAGE>

VEL ACCOUNT

NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1995

NOTE 1 - ORGANIZATION

The VEL Account (VEL) is a separate investment account of Allmerica Financial
Life Insurance and Annuity Company (formerly named SMA life Assurance Company)
(the Company), established for the purpose of separating from the general assets
of the Company those assets used to fund the variable portion of flexible
premium variable life policies issued by the Company. Effective October 16,
1995, concurrent with the demutualization, State Mutual Life Assurance Company
of America changed their name to First Allmerica Life Insurance Company (First
Allmerica). The Company is a wholly-owned subsidiary of First Allmerica. Under
applicable insurance law, the assets and liabilities of VEL are clearly
identified and distinguished from the other assets and liabilities of the
Company. VEL cannot be charged with liabilities arising out of any other
business of the Company.

VEL is registered as a unit investment trust under the Investment Company Act
of 1940, as amended (the 1940 Act). VEL currently offers nineteen Sub-Accounts.
Each Sub-Account invests exclusively in a corresponding investment portfolio of
the Allmerica Investment Trust (the Trust) managed by Allmerica Investment
Management Company, Inc., a wholly-owned subsidiary of First Allmerica, of the
Variable Insurance Products Fund (VIPF) or of the Variable Insurance Products
Fund II (VIPF II) managed by Fidelity Management & Research Company (Fidelity
Management), or of the T. Rowe Price International Series, Inc. (T. Rowe)
managed by Price-Fleming or of the Delaware Group Premium Fund, Inc. (DGPF)
managed by Delaware International Advisors, Ltd. The Trust, VIPF, VIPFII, T.
Rowe and DGPF (the Funds) are open-end, diversified series management investment
companies registered under the 1940 Act.

As of December 31, 1995, the Company was record owner of approximately 49% of
VEL Sub-Account 4.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Investments - Security transactions are recorded on the trade date.
Investments held by the Sub- Accounts are stated at the net asset value per
share of the respective investment portfolio of the Trust, VIPF, VIPFII, T.
Rowe, or DGPF. Net realized gains and losses on securities sold are determined
on the average cost method. Dividends and capital gain distributions are
recorded on the ex-dividend date and are reinvested in additional shares of the
respective investment portfolio of the Trust, VIPF, VIPFII, T. Rowe, or DGPF at
net asset value.

Federal Income Taxes - The Company is taxed as a "life insurance company"
under Subchapter L of the Internal Revenue Code and files a consolidated federal
income tax return with First Allmerica. The Company anticipates
no tax liability resulting from the operations of VEL. Therefore, no provision
for income taxes has been charged against VEL.

NOTE 3 - INVESTMENTS

The number of shares owned, aggregate cost, and net asset value per share of
each Sub-Account's investment in the Trust, VIPF, VIPFII, T. Rowe, and DGPF at
December 31, 1995 were as follows:

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
PORTFOLIO INFORMATION
SUB- INVESTMENT NUMBER OF AGGREGATE NET ASSET
ACCOUNT PORTFOLIO SHARES COST VALUE PER SHARE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Allmerica Investment Trust:
1 Growth 16,310,219 $ 31,160,598 $ 2.176
2 Investment Grade Income 8,851,864 9,611,899 1.117
3 Money Market 6,152,803 6,152,803 1.000
4 Equity Index 12,051,618 15,485,993 1.827
5 Government Bond 1,933,214 2,045,381 1.062
6 Select Aggressive Growth 7,790,705 10,841,295 1.848
7 Select Growth 4,546,536 5,062,916 1.369
8 Select Growth and Income 5,122,732 5,524,546 1.268
9 Small Cap Value 2,998,135 3,423,581 1.238
11 Select International Equity 1,884,814 1,973,819 1.136
12 Select Capital Appreciation 938,769 1,179,121 1.369

Fidelity Variable Insurance Products Fund:
101 Money Market 2,713,021 2,713,021 1.000
102 High Income 769,251 8,034,448 12.050
103 Equity Income 2,683,276 36,112,073 19.270
104 Growth 1,796,794 33,302,360 29.200
105 Overseas 1,073,170 15,163,843 17.050

Fidelity Variable Insurance Products Fund II:
106 Asset Manager 79,458 1,121,981 15.790

150 T. Rowe Price International Series, Inc.:
International Stock 47,069 514,086 11.260

Delaware Group Premium Fund:
207 International Equity 271,715 3,190,089 13.110
</TABLE>

<PAGE>

VEL ACCOUNT

NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1995, CONTINUED

NOTE 4 - RELATED PARTY TRANSACTIONS

On the date of issue and each monthly payment date thereafter, a monthly
charge is deducted from the policy value to compensate the Company for the
cost of insurance, which varies by policy, the cost of any additional
benefits provided by rider, and administrative charges of $25 per month for
the first policy year and $5 per month thereafter. The policy owner may
instruct the Company to deduct this monthly charge from a specific
Sub-Account, but if not so specified, it will be deducted on a pro-rata basis
of allocation which is the same proportion that the policy value in the
General Account of the Company and in each Sub-Account bear to the total
policy value. For the years ended December 31, 1995, 1994, and 1993, these
monthly deductions from Sub-Account policy values amounted to $16,115,041,
$16,039,234 and $14,456,177, respectively. The Company makes a charge of .90%
per annum based on the average daily net assets of each Sub-Account at each
valuation date for mortality and expense risks. This charge is deducted in
the daily computation of unit values but paid to the Company on a monthly
basis. The total annual charge may be increased or decreased by the Board of
Directors of the Company once each year, subject to compliance with
applicable state and federal requirements, but the total charge may not
exceed 1.275% per annum.

Allmerica Investments, Inc., (Allmerica Investments), a wholly-owned
subsidiary of First Allmerica, is principal underwriter and general distributor
of VEL, and does not receive any compensation for sales of VEL policies.
Commissions are paid to registered representatives of Allmerica Investments by
the Company. As the current series of policies have a contingent deferred sales
charge, no deduction is made for sales charges at the time of the sale. For the
years ended December 31, 1995, 1994, and 1993, the Company received $1,391,628,
$1,084,922 and $832,533, respectively, for contingent deferred sales charges
applicable to VEL.

NOTE 5 - DIVERSIFICATION REQUIREMENTS

Under the provisions of Section 817(h) of the Internal Revenue Code, a
variable life insurance contract, other than a contract issued in connection
with certain types of employee benefit plans, will not be treated as a variable
life insurance contract for federal income tax purposes for any period for which
the investments of the segregated asset account on which the contract is based
are not adequately diversified. The Code provides that the "adequately
diversified" requirement may be met if the underlying investments satisfy either
a statutory safe harbor test or diversification requirements set forth in
regulations issued by the Secretary of Treasury.

The Internal Revenue Service has issued regulations under Section 817(h) of
the Code. The Company believes that VEL satisfies the current requirements of
the regulations, and it intends that VEL will continue to meet such
requirements.

NOTE 6 - PURCHASES AND SALES OF SECURITIES

Cost of purchases and proceeds from sales of the Trust, VIPF, VIPF II, T.
Rowe, and DGPF shares by VEL during the year ended December 31, 1995 were as
follows:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
SUB-
ACCOUNT INVESTMENT PORTFOLIO PURCHASES SALES
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Allmerica Investment Trust:
1 Growth . . . . . . . . . . . . . . . . . . . . . . $ 5,896,939 $ 1,207,370
2 Investment Grade Income. . . . . . . . . . . . . . 1,685,476 708,247
3 Money Market . . . . . . . . . . . . . . . . . . . 4,655,994 4,300,065
4 Equity Index . . . . . . . . . . . . . . . . . . . 2,989,186 393,864
5 Government Bond. . . . . . . . . . . . . . . . . . 800,420 1,176,027
6 Select Aggressive Growth . . . . . . . . . . . . . 2,241,336 575,313
7 Select Growth. . . . . . . . . . . . . . . . . . . 881,195 443,822
8 Select Growth and Income . . . . . . . . . . . . . 1,453,625 723,051
9 Small Cap Value. . . . . . . . . . . . . . . . . . 1,279,126 484,088
11 Select International Equity. . . . . . . . . . . . 1,432,992 119,388
12 Select Capital Appreciation. . . . . . . . . . . . 1,200,904 23,361

Fidelity Variable Insurance Products Fund:
101 Money Market . . . . . . . . . . . . . . . . . . . 1,334,130 1,177,464
102 High Income. . . . . . . . . . . . . . . . . . . . 1,871,225 802,435
103 Equity Income. . . . . . . . . . . . . . . . . . . 6,973,151 1,546,652
104 Growth . . . . . . . . . . . . . . . . . . . . . . 3,879,575 2,387,222
105 Overseas . . . . . . . . . . . . . . . . . . . . . 2,128,725 2,256,791

Fidelity Variable Insurance Products Fund II:
106 Asset Manager. . . . . . . . . . . . . . . . . . . 576,942 372,514

150 T. Rowe Price International Series, Inc.:
International Stock. . . . . . . . . . . . . . . . 522,988 8,804

Delaware Group Premium Fund:
207 International Equity . . . . . . . . . . . . . . . 979,768 399,934
------------- -------------
Totals . . . . . . . . . . . . . . . . . . . . . . $ 42,783,697 $ 19,106,412
------------- -------------
------------- -------------
</TABLE>

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of Allmerica Financial Life Insurance
and Annuity Company and Policyowners of
VEL Account of Allmerica Financial Life Insurance
and Annuity Company

In our opinion, the accompanying statements of assets and liabilities and
the related statements of operations and of changes in net assets present
fairly, in all material respects, the financial position of each of the Sub-
Accounts (1, 2, 3, 4, 5, 6, 7, 8, 9, 11, 12, 101, 102, 103, 104, 105, 106, 150,
207) constituting the VEL Account of Allmerica Financial Life Insurance and
Annuity Company at December 31, 1995, and the results of their operations and
the changes in each of their net assets for the periods indicated, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of Allmerica Financial Life Insurance and Annuity Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of investments owned at December 31, 1995 by correspondence with
the Funds, provide a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP
Boston, Massachusetts

February 23, 1996

<PAGE>

Part II

UNDERTAKING TO FILE REPORTS

Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.

RULE 484 UNDERTAKING

Article VIII of Registrant's Bylaws provides: Each Director and each Officer
of the Corporation, whether or not in office, (and his executors or
administrators), shall be indemnified or reimbursed by the Corporation
against all expenses actually and necessarily incurred by him in the defense
or reasonable settlement of any action, suit, or proceeding in which he is
made a party by reason of his being or having been a Director or Officer of
the Corporation, including any sums paid in settlement or to discharge
judgment, except in relation to matters as to which he shall be finally
adjudged in such action, suit, or proceeding to be liable for negligence or
misconduct in the performance of his duties as such Director or Officer; and
the foregoing right of indemnification or reimbursement shall not affect any
other rights to which he may be entitled under the Articles of Incorporation,
any statute, bylaw, agreement, vote of stockholders, or otherwise.

Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.

RULE 6E-3(T) REPRESENTATIONS, DESCRIPTIONS AND UNDERTAKINGS

Registrant makes the following representations pursuant to the requirements
of Rule 6e-3(T) under the Investment Company Act of 1940:

A. Risk Charge

Pursuant to Rule 6e-3(T)(b)(13)(iii)(F)(1), Registrant represents that Rule
6e-3(T)(b)(13)(iii)(F) has been relied upon in deducting charges for
mortality expense and risks assumed by Allmerica Financial Life Insurance and
Annuity Company (the "Company").

Pursuant to Rule 6e-3(T)(b)(13)(iii)(F)(2), Registrant represents that the
mortality and expense risk charge is within the range of industry practice
for comparable flexible premium variable life insurance contracts. The
methodology used to support this representation is based upon an analysis of
the mortality and expense risk charges adopted under other flexible premium
variable life insurance contracts. Registrant undertakes to keep and make
available to the Commission on request the documents used to support the
foregoing representation.

<PAGE>

B. Distribution Costs

Pursuant to Rule 6e-3(T)(b)(13)(iii)(F)(4)(ii)(A), Registrant represents that
the Company has concluded that there is a reasonable likelihood that the
distribution financing arrangement of the Registrant will benefit the
Registrant and contract holders and will keep and make available to the
Commission on request a memorandum setting forth the basis for this
representation. Pursuant to Section 6e-3(T)(b)(13)(iii)(F)(4)(ii)(B)(2),
Registrant also represents that it will invest only in management investment
companies which have undertaken to have a board of directors, a majority of
whom are not interested persons of the company, formulate and approve any
plan under Rule 12b-1 under the Investment Company Act of 1940 to finance
distribution expenses.

CONTENTS OF THE REGISTRATION STATEMENT

This registration statement comprises the following papers and documents:

The facing sheet.
Cross-reference to items required by Form N-8B-2.
The prospectus consisting of ____ pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484 under the Securities Act of 1933.
Representatives, descriptions and undertaking pursuant to
Rule 6e-3(T)(b)(13)(iii)(F) under the Investment Company Act
of 1940 (the "1940 Act").
The signatures.

<PAGE>

Written consents of the following persons:

1. Price Waterhouse LLP

2. Opinion of Counsel

3. Actuarial Consent

4. Consent of Newly Elected Directors

The following exhibits:

1. Exhibit 1

(Exhibits required by paragraph A of the instructions to Form N-8B-2)

(1) Resolutions of the Board of Directors of the Company establishing
the VEL Account were previously filed by the Registrant,
Registration No. 33-14672, on June 3, 1987, and are incorporated
herein by reference.

(2) Not Applicable.

(3) (a) Sales and Administrative Services Agreement between the
Company and Allmerica Investments, Inc. was previously filed
by the Registrant, Registration No. 33-14672, on June 3,
1987, and is incorporated herein by reference.

(b) Registered Representative Agreement and Resident Sponsor
Agreement of Allmerica Investment, Inc. were previously
filed by the Registrant, Registration No. 33-14672, on
June 3, 1987, and are incorporated herein by reference.

(4) Not Applicable.

(5) Forms of Generic Policy and Policy riders were previously filed
on May 1, 1992 and are incorporated herein by reference.

(6) Organizational documents of the Company, as amended were
previously filed on October 1, 1995 and are incorporated herein by
reference.

(7) Not Applicable.

(8) (a) Form of Participation Agreement with Variable Insurance
Products Fund and Variable Insurance Products Fund II was
previously filed by the Registrant, Registration No. 33-14672,
on June 3, 1987, and is incorporated herein by reference.

(b) Participation Agreement with Allmerica Investment Trust
(formerly SMA Investment Trust) was previously filed by the
Registrant, Registration No. 33-14672, on June 3, 1987, and is
incorporated herein by reference.

(c) Form of Participation Agreement with Delaware Group Premium
Fund, Inc. was previously filed on June 3, 1987 in
Registration Statement No. 33-14672 and is incorporated
herein by reference.

(d) Form of Participation Agreement with T. Rowe Price
International Series, Inc. was previously filed on May 1, 1995
and is incorporated herein by reference.

(e) Service Agreement - Fidelity Management et al.

<PAGE>

(9) Not Applicable.

(10) Form of Application was previously filed by the
Registrant, Registration No. 33-14672, on June 3, 1987, and
is incorporated herein by reference.

2. Form of Policy and Policy riders are included in Exhibit 1 above.

3. Opinion of Counsel.

4. Not Applicable.

5. Not Applicable.

6. Actuarial Consent.

7. Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(iii)
under the 1940 Act which includes conversion procedures pursuant to
Rule 6e-3(T)(b)(13)(v)(B) was previously filed on May 1, 1992 and
is incorporated herein by reference.

8. Consent of Independent Accountants.

9. AUV Calculation Services Agreement with The Shareholder Services
Group dated March 31, 1995 was previously filed on May 1, 1995 and is
incorporated herein by reference.

10. Consent of Newly Named Directors.

27. Financial Data Schedules.

<PAGE>

FORM S-6 EXHIBIT TABLE
----------------------

Exhibit 1(8)(e) Fidelity Services Agreement

Exhibit 3 Opinion of Counsel

Exhibit 6 Actuarial Consent

Exhibit 8 Consent of Independent Accountants

Exhibit 10 Consent of Newly Named Directors

Exhibit 27 Financial Data Schedule
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Worcester, and Commonwealth of Massachusetts
in the 26th. day of April, 1996.

Allmerica Financial Life Insurance and
Annuity Company
VEL Account
(Registrant)

By: /s/ Joseph W. MacDougall, Jr.
-----------------------------
Joseph W. MacDougall, Jr.
Vice President, Associate General
Counsel and Assistant Secretary

Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed by the following persons in the
capacities and on the date indicated.

Signature Title Date
--------- ----- -----

/s/ Richard M. Reilly Director, President and April 26,1996
- --------------------- Chief Executive Officer
Richard M. Reilly

/s/ John F. O'Brien Director and Chairman of April 26,1996
- ------------------- the Board
John F. O'Brien

/s/ Eric A. Simonsen Director, Vice President and April 26,1996
- -------------------- Chief Financial Officer
Eric A. Simonsen

/s/ Mark R. Colborn Vice President and Controller April 26, 1996
- --------------------
Mark R. Colborn

/s/ Richard J. Baker Director and Vice President April 26,1996
- --------------------
Richard J. Baker

/s/ John F. Kelly Director April 26,1996
- --------------------
John F. Kelly

<PAGE>
EXHIBIT 1.(8)(e)

SERVICE AGREEMENT

This Agreement is entered into and effective as of the 1st day of
November, 1995, by and between FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS
COMPANY ("FIIOC") and ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
("Company").

WHEREAS, FIIOC provides transfer agency and other services to
Fidelity's Variable Insurance Products Fund and Variable Insurance Products
Fund II (collectively "Funds"); and

WHEREAS, the services provided by FIIOC on behalf of the Funds include
responding to inquiries about the Funds, including the provision of
information about the Funds' investment objectives, investment policies,
portfolio holdings, etc.; and

WHEREAS, Company holds shares of the Funds in order to fund certain
variable annuity contracts, group annuity contracts, and/or variable life
insurance policies, the beneficial interests in which are held by
individuals, plan trustees, or others who look to Company to provide
information about the Funds similar to the information provided by FIIOC; and

WHEREAS, the Company and one or both of the Funds have entered into
one or more Participation Agreements, under which the Company agrees not to
provide information about the Funds except for information provided by the
Funds or their designees; and

WHEREAS, FIIOC and Company desire that Company be able to respond to
inquiries about the Funds from individual variable annuity owners,
participants in group annuity contracts issued by the Company, and owners and
participants under variable life insurance policies issued by the Company,
and prospective customers for any of the above; and

WHEREAS, FIIOC and Company recognize that Company's efforts in
responding to customer inquiries will reduce the burden that such inquiries
would place on FIIOC should such inquiries be directed by FIIOC

NOW, THEREFORE, the parties do agree as follows:

1. INFORMATION TO BE PROVIDED TO COMPANY. FIIOC agrees to provide
to Company, on a periodic basis, directly or through a designee, information
about the Funds' investment objectives, investment policies, portfolio
holdings, performance, etc. The content and format of such information shall
be as FIIOC, in its sole discretion, shall choose. FIIOC may change the
format and/or content of such informational reports, and the frequency with
which such information is provided. For purposes of Section 4.2 of each of
the Company's Participation Agreement(s) with the Funds, FIIOC represents
that it is the designee of the Funds, and Company may therefore use the
information provided by FIIOC without seeking additional permission from the
Funds.

2. USE OF INFORMATION BY COMPANY. Company may use the information
provided by FIIOC in communications to individuals, plan trustees, or others
who have legal title or beneficial interest in the annuity or life insurance
products issued by Company, and to prospective purchasers of such products or
beneficial interests thereunder. If such information is contained as part of
larger pieces of sales literature, advertising, etc., such pieces shall be
furnished for review to the Funds in accordance with the terms of the
Company's Participation Agreements with the Funds. Nothing herein shall give
the Company the right to expand upon, reformat or otherwise alter the
information provided by FIIOC. Company acknowledges that the information
provided it by FIIOC may need to be supplemented with additional qualifying
information, regulatory disclaimers, or other information before it may be
conveyed to persons outside the Company.

<PAGE>

3. COMPENSATION TO COMPANY. In recognition of the fact that Company
will respond to inquiries that otherwise would be handled by FIIOC, FIIOC
agrees to pay Company a quarterly fee computed as follows:

At the close of each calendar quarter, FIIOC will determine the
Average Daily Assets held in the Funds by the Company. Average Daily Assets
shall be the sum of the daily assets for each calendar day in the quarter
divided by the number of calendar days in the quarter. The Average Daily
Assets shall be multiplied by 0.0002 (2 basis points) and that sum shall be
divided by four. The resulting number shall be the quarterly fee for that
quarter, which shall be paid to Company during the following month.

Should the Participation Agreement(s) between Company and the Fund(s)
be terminated effective before the last day of a quarter, Company shall be
entitled to a fee for that portion of the quarter during which the
Participation Agreement was still in effect, unless such termination is due
to misconduct on the part of Company. For such a stub quarter, Average
Daily Assets shall be the sum of the daily assets for each calendar day in
the quarter through and including the date of termination of the
Participation Agreement(s), divided by the number of calendar days in that
quarter for which the Participation Agreement was in effect. Such Average
Daily Assets shall be multiplied by 0.0002 (2 basis points) and that number
shall be multiplied by the number of days in such quarter that the
Participation Agreement was in effect, then divided by three hundred
sixty-five. The resulting number shall be the quarterly fee for the stub
quarter, which shall be paid to Company during the following month.

4. TERMINATION. This Agreement may be terminated by Company at any
time upon written notice to FIIOC. FIIOC may terminate this Agreement at any
time upon ninety (90) days' written notice to Company. FIIOC may terminate
this Agreement immediately upon written notice to Company (1) if required by
any applicable law or regulation, (2) if so required by action of the
Fund(s) Board of Trustees, or (3) if Company engages in any material breach
of this agreement. This Agreement shall terminate immediately and
automatically upon the termination of Company's Participation Agreement(s)
with the Funds, and in such event no notice need be given hereunder.

5. INDEMNIFICATION. Company agrees to indemnify and hold harmless
FIIOC for any misuse by Company, its affiliates, its agents, its brokers, and
any persons controlling Company, under common control with Company, or
controlled by Company, of the information provided by FIIOC under this
Agreement.

6. APPLICABLE LAW. This Agreement shall be construed and the
provisions hereof interpreted under and in accordance with the laws of the
Commonwealth of Massachusetts.

7. ASSIGNMENT. This Agreement may not be assigned, except that it
shall be assigned automatically to any successor to FIIOC as the Funds'
transfer agent, and any such successor shall be bound by the terms of this
Agreement.

IN WITNESS WHEREOF, the parties have set their hands as of the date
first written above.

FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY

By: /s/ Virginia Meany
--------------------------
Virginia Meany
Senior Vice President

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY

By: /s/ Richard M. Reilly
--------------------------
Name: Richard M. Reilly
--------------------------
Title: President
--------------------------

<PAGE>

EXHIBIT 3

April 21, 1996

Allmerica Financial Life Insurance and Annuity Company
440 Lincoln Street
Worcester MA 01653

Gentlemen:

In my capacity as Counsel of Allmerica Financial Life Insurance and Annuity
Company (the "Company"), I have participated in the preparation of the
Post-Effective Amendment to the Registration Statement for the VEL Account on
Form S-6 under the Securities Act of 1933 with respect to the Company's
individual flexible premium variable life insurance policies.

I am of the following opinion:

1. The VEL Account is a separate account of the Company validly existing
pursuant to the Delaware Insurance Code and the regulations issued
thereunder.

2. The assets held in the VEL Account equal to the reserves and other policy
liabilities of the Policies which are supported by the VEL Account are not
chargeable with liabilities arising out of any other business the Company
may conduct.

3. The individual flexible premium variable life insurance policies, when
issued in accordance with the Prospectus contained in the Registration
Statements and upon compliance with applicable local law, will be legal and
binding obligations of the Company in accordance with their terms and when
sold will be legally issued, fully paid and non-assessable.

In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as in my judgment are necessary or
appropriate.

I hereby consent to the filing of this opinion as an exhibit to the Post-
Effective Amendment to the Registration Statement of the VEL Account on Form S-6
filed under the Securities Act of 1933.

Very truly yours,

/s/ Sheila B. St. Hilaire
Sheila B. St. Hilaire
Counsel

<PAGE>
EXHIBIT 6

April 22, 1996

Allmerica Financial Life Insurance and Annuity Company
440 Lincoln Street
Worcester MA 01653

Gentlemen:

This opinion is furnished in connection with the filing by Allmerica Financial
Life Insurance and Annuity Company of a Post-Effective Amendment to the
Registration Statement on Form S-6 of its flexible premium variable life
insurance policies ("Policies") allocated to the VEL Account under the
Securities Act of 1933. The prospectus included in the Registration Statement
describes the Policies. I am familiar with and have provided actuarial advice
concerning the preparation of the Post-Effective Amendment to the Registration
Statement, including exhibits.

In my professional opinion, the illustration of death benefits and cash values
included in Appendix C of the prospectus, based on the assumptions stated in the
illustrations, are consistent with the provisions of the Policy. The rate
structure of the Policies has not been designed so as to make the relationship
between premiums and benefits, as shown in the illustrations, appear more
favorable to a prospective purchaser of a Policy for a person age 30 or a person
age 45 than to prospective purchasers of Policies for people at other ages or
underwriting classes.

I hereby consent to the use of this opinion as an exhibit to the Post-Effective
Amendment to the Registration Statement.

Sincerely,

/s/ William H. Mawdsley
William H. Mawdsley, FSA, MAAA
Vice President and Actuary

<PAGE>
EXHIBIT 8

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment No. 9 to the Registration Statement on Form S-6 of
our report dated February 5, 1996, relating to the financial statements of
Allmerica Financial Life Insurance and Annuity Company and our report dated
February 23, 1996, relating to the financial statements of the VEL Account of
Allmerica Financial Life Insurance and Annuity Company, both of which appear
in such Prospectus. We also consent to the reference to us under the heading
"Independent Accountants" in such Prospectus.

/s/ Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts

April 25, 1996

<PAGE>

EXHIBIT 10

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
Consent of Newly Elected Director

Having been duly elected as a Director of Allmerica Financial Life Insurance
and Annuity Company ("Company"), effective April 30, 1996, each of the
undersigned hereby consents to being named as a Director of the Company in such
post-effective amendments to Registration Statements for the Company's variable
annuity and variable life contracts as will be filed with the Securities and
Exchange Commission on or before April 30, 1996, with an effective date on or
after April 30, 1996, pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940.

Signed this 25th day of April, 1996

/s/ Bruce C. Anderson /s/ Theodore J. Rupley
- ------------------------- -------------------------
Bruce C. Anderson Theodore J. Rupley

/s/ Kruno Huitzingh /s/ Phillip E. Soule
- ------------------------- -------------------------
Kruno Huitzingh Phillip E. Soule

/s/ Larry C. Renfro /s/ Diane E. Wood
- ------------------------- -------------------------
Larry C. Renfro Diane E. Wood

<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> SMAVE001

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 31160598
<INVESTMENTS-AT-VALUE> 35491036
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 35491036
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 34320
<TOTAL-LIABILITIES> 34320
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 11110145
<SHARES-COMMON-PRIOR> 10561399
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4330438
<NET-ASSETS> 35456716
<DIVIDEND-INCOME> 3398296
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 276867
<NET-INVESTMENT-INCOME> 3121429
<REALIZED-GAINS-CURRENT> 114997
<APPREC-INCREASE-CURRENT> 5074547
<NET-CHANGE-FROM-OPS> 8310973
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 9847912
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 30763000
<PER-SHARE-NAV-BEGIN> 2.425
<PER-SHARE-NII> .288
<PER-SHARE-GAIN-APPREC> .478
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 3.191
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> SMAVE002

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 9611899
<INVESTMENTS-AT-VALUE> 9887532
<RECEIVABLES> 20456
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9907988
<PAYABLE-FOR-SECURITIES> 0
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</TABLE>

<PAGE>
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<NAME> SMAVE003

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</TABLE>

<PAGE>
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<NUMBER> 4
<NAME> SMAVE004

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</TABLE>

<PAGE>
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<NUMBER> 5
<NAME> SMAVE005

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</TABLE>

<PAGE>
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<NUMBER> 6
<NAME> SMAVE006

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</TABLE>

<PAGE>
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<NUMBER> 7
<NAME> SMAVE007

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</TABLE>

<PAGE>
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<NUMBER> 8
<NAME> SMAVE008

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</TABLE>

<PAGE>
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<NAME> SMAVE009

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</TABLE>

<PAGE>
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<NUMBER> 10
<NAME> SMAVE011

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</TABLE>

<PAGE>
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<NUMBER> 11
<NAME> SMAVE101

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<NAME> SMAVE102

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<PAGE>
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<NAME> SMAVE103

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</TABLE>

<PAGE>
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<NAME> SMAVE104

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</TABLE>

<PAGE>
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<NAME> SMAVE105

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</TABLE>

<PAGE>
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<NAME> SMAVE106

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</TABLE>

<PAGE>
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<NAME> SMAVE207

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</TABLE>

<PAGE>
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<NAME> SMAVE012

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</TABLE>

<PAGE>
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<NAME> SMAVE150

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